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 $800,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $458,250; land, $331,500; land improvements, $48,750; and four vehicles, $136,500. The companys fiscal year ends on December 31.

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

Allocation of total cost Appraised Value % of Total Appraised Value x Total cost of Acquisition Apportioned Cost

Building $ % x $ $

Land % x $

Land improvements % x $

Vehicles % x

Total %

*in order to get correct % calculate using appraised value total.

1.2 Prepare the journal entry to record the purchase.

Date General Journal Debit Credit

Jan 01 Building

Land

Land improvements

Vehicles

Cash

2. Compute the depreciation expense for year 2015 on the building using the straight-line method, assuming a 15-year life and a $30,000 salvage value. (Round your answers to the nearest whole dollar.)

Depreciation expense on building

3. Compute the depreciation expense for year 2015 on the land improvements assuming a five-year life and double-declining-balance depreciation.

Depreciation expense on land improvements +tion:

2.

Year 2015 straight-line depreciation on building

3.Year 2015 double-declining-balance depreciation on land improvements