Timberly Construction negotiates a lump-sum purchase of several assets from a company that is going out of business. The purchase is completed on January 1, 2013, at a total cash price of $830,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $448,500; land, $253,500; land improvements, $29,250; and four vehicles, $243,750. The companys fiscal year ends on December 31. Required:

1.1 Prepare a table to allocate the lump-sum purchase price to the separate assets purchased.

1.2 Prepare the journal entry to record the purchase.

2. Compute the depreciation expense for year 2013 on the building using the straight-line method, assuming a 15-year life and a $30,000 salvage value.

3. Compute the depreciation expense for year 2013 on the land improvements assuming a five-year life and double-declining-balance depreciation.