Timberly Construction negotiates a lump-sum purchase of several assets from a co
ID: 2532642 • Letter: T
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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, 2017, at a total cash price of $820,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $507,000; land, $312,000; land improvements, $68,250; and four vehicles, $87,750. The company’s fiscal year ends on December 31. Required: 1-a. Prepare a table to allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the depreciation expense for year 2017 on the building using the straight-line method, assuming a 15-year life and a $32,000 salvage value. 3. Compute the depreciation expense for year 2017 on the land improvements assuming a five-year life and double-declining-balance depreciation.
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, 2017, at a total cash price of $820,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $507,000; land, $312,000; land improvements, $68,250; and four vehicles, $87,750. The company's fiscal year ends on December 31. 13.75 points Required: 1-a. Prepare a table to allocate the lump-sum purchase price to the separate assets purchased 1-b. Prepare the journal entry to record the purchase 2. Compute the depreciation expense for year 2017 on the building using the straight-line method, assuming a 15-year life and a $32,000 salvage value 3. Compute the depreciation expense for year 2017 on the land improvements assuming a five-year life and double-declining-balance depreciation. eBook Print Complete this question by entering your answers in the tabs below References Required 1A Required 1B Required 2 Required 3 Prepare a table to allocate the lump-sum purchase price to the separate assets purchased Percent of Total Appraised Value Total cost of Appraised Value Apportioned Cost Allocation of total cost Building Land Land improvements Vehicles Total $507,000 312,000 68,250 87,750 $ 975,000 53 61X $820,000 $ 268,710 99,840 2,730 9,653 $380,933 32% |x $ 820,000 4 %x S 820,000 111% 1x $ 820,000 100% Required 1A Required 1B>Explanation / Answer
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Part 1a A B=A/975000 C B*C Appraised Value % of toal Total Cost of Acquisition Apportioned Cost Building 507000 52% 820000 426400 Land 312000 32% 820000 262400 Land Improvements 68250 7% 820000 57400 Vehicle 87750 9% 820000 73800 975000 100% 820000 Part 1b Journal Entry Date Account Debit Credit Jan 1 2017 Building 426400 Land 262400 Land Improvements 57400 Vehicle 73800 Cash 820000 Part 2 Depreciation on Building Apportioned Cost 426400 Less: Salvage Value 32000 394400 Life 15 Years Depreciation for 2017 394400/15 26293 Part 3 Depreciation on Land Improvement Apportioned Cost 57400 Life 5 Year i.e. 100/5=20% Double Declining Rate 20*2 40% Depreciation for 2017 57400*40% 22960Related Questions
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