Zeidler Company bought a building and the land on which the building is located for a total cash price of $ 356,000. The company paid transfer costs of $ 4,000. Renovation costs on the building were $ 46,000. An independent appraiser provided market values for the land, $ 100,000, and building, $ 300,000 before renovation.
Required:
1. Apportion the cost of the property on the basis of the appraised values. Show computations.
2. Prepare the journal entry to record the purchase of the building and land, including all expenditures. Assume that all transactions were for cash and that all purchases occurred at the start of the year.
3. Compute depreciation of the building at the end of one year, using the straight- line method. Assume an estimated useful life of 12 years and an estimated residual value of $ 28,000.
4. What would be the carrying amount of the property (building and land) at the end of year 2?