Question
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,
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, 2015, at a total cash price of $810,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $467,650; land, $328,350; land improvements, $69,650; and four vehicles, $129,350. The company's 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 2015 on the building using the straight-line method, assuming a 15-year life and a $29,000 salvage value. (Round your answers to the nearest whole dollar.) |
3. | Compute the depreciation expense for year 2015 on the land improvements assuming a five-year life and double-declining-balance depreciation. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started