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Acquisition of An Asset:

Moss Piano Company purchases a tract of land and an existing building for $$1,000,000.$

The company plans to remove the old building and construct a new restaurant on the site.

In addition to the purchase price, Moss pays closing costs, including title insurance of

$$3,000.$ The company also pays $$14,000$ in property taxes, which includes $$9,000$ of back

taxes $($unpaid taxes from previous years$)$ paid by Moss on behalf of the seller and $$5,000$

due for the current fiscal year after the purchase date. Shortly after closing, the company

pays a contractor $$50,000$ to tear down the old building and remove it from the site. Moss

is able to sell salvaged materials from the old building for $$5,000$ and pays an additional

$$11,000$ to level the land.

Determine the cost of the land.

Depreciation and Disposal

The Moss Piano Company purchased a Delivery Truck on January $1,2025$ for $$50,000$

which included all costs to get the asset ready for use. The truck has an anticipated life of

$100,000$ miles or $4$ years. The estimated residual value at the end of the assets service life

is expected to be $$2,000.$ For assets of this type, the company utilizes the straight$-$line

depreciation method.

$$he asset.

$)$ Complete the depreciation table below.

c$)$ Record the entry for December $31,2025$ to record the depreciation for the year.

D$)$ Suppose the company sells the van on December $31,2027$ for $$18,000$ cash. Provide

the journal entry to record the sale.

E$)$ Assume the company chooses to use the units$-$of$-$production method. Based on the

information below, complete the depreciation schedule.

$7$

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