On April 1, 2000, Rosenberg Company purchased for $$ 200,000$ a tract of land on which was
Question:
On April 1, 2000, Rosenberg Company purchased for $\$ 200,000$ a tract of land on which was located a fully equipped factory. The following information was compiled regarding this purchase:
\begin{tabular}{|c|c|c|}
\hline & \begin{tabular}{l}
Market \\
Value
\end{tabular} & \begin{tabular}{c}
Seller's \\
Book Value
\end{tabular} \\
\hline Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . & $\$ 75,000$ & $\$ 30,000$ \\
\hline Building . . . . . . . . . . . . . . . . . . . . & 100,000 & 75,000 \\
\hline Equipment. . . . . . . . . . . . . . . . . . . . & 50,000 & 60,000 \\
\hline Totals. & $\$ 225,000$ & $\$ 165,000$ \\
\hline
\end{tabular}
1. Prepare the journal entry to record the purchase of these assets.
2. Assume that the building is depreciated on a straight-line basis over a remaining life of 20 years and the equipment is depreciated on a straight-line basis over five years. Neither the building nor the equipment is expected to have any salvage value. Compute the depreciation expense for 2000 assuming the assets were placed in service immediately upon acquisition.
Step by Step Answer:
Survey Of Accounting
ISBN: 9780538846172
1st Edition
Authors: James D. Stice, W. Steve Albrecht, Earl Kay Stice, K. Fred Skousen