An asset having a four-year service life and a salvage value of $5,000 was acqui

Question

An asset having a four-year service life and a salvage value of $5,000 was acquired for $4,000 cash on April 2. Using straight-line depreciation what will be the partial year depreciation expense at the end of the first year, December 317 a. $10,000 b. $9,375 C.$7,500 O d, $11,250 e.$8,437.50 QUESTION8 included both land and a building for $665,000. The appraisal estimated the fair market value of the land ,000 for a total FMV of both of $775,000.When recording the acquisition of the property how much Parker Inc to be $225,000 and the building to be $550 should be debited to the building example, 0.4532 would be 45% when rounded to the nearest whole percent.) g the calculations round the % of FMV to the nearest whole percent. For a.Debit Building for $472,150 Ob. Debit Building for $192,850 c, Debit Building for $665,000 d.Debit Building for $550,000

Explanation / Answer

Q1. Answer is C. 7500 Explanation: Cost of Asset: 45,000 Salvage value: 5,000 Life: 4 years Annual Depreciation = Cost -Salvage / Life = (45000-5000)4 = $ 10,000 Depreciation for 9 months in current year: 10,000*9/12 = $7500 Q2. Answer is a. Debit buildig $ 472150 Explanation: Total Market value: $ 775000 Cost of acquisition: $ 665,000 % of Cost to FMV (665000/775000*100): 86% FMV of Building: 550,000 Cost of Building to be recorded in books: 550,000*85.81% = $472000

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