Question
XYZ Company makes a lump-sum purchase of several assets on January 1 at a total cash price of $800,000. The estimated market values of the
XYZ Company makes a lump-sum purchase of several assets on January 1 at a total cash price of $800,000. The estimated market values of the purchased assets are building, $536,250; land, $302,250; land improvements, $68,250; and four vehicles, $68,250.
1A. Allocate the lump-sum purchase price to the separate assets purchased.
Allocation of total cost | Appraised Value | % of total appraised value | Total cost of acquisition | ApportionedCost |
Building | ||||
Land | ||||
Land Improvements | ||||
Vehicles | ||||
Total |
1B. Prepare the journal entry to record the purchase.
Date | General Journal | Debit | Credit |
Jan 01 | |||
Options for general journal: accumulated amortization, accumulated depletion, accumulated depreciation, amortization expense, building, cash, depletion expense, depreciation expense, equipment, gain on sale of equipment, goodwill, impairment loss, land, land improvements, leasehold improvements.
2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $30,000 salvage value. Round answer to the nearest whole dollar.
3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation.
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