Timberly Construction negotlates a lump-sum purchase of several assets from a co

Question

Timberly Construction negotlates 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 $810,000 for a bullding, land, land Improvements, and four vehicles. The estimated market values of the assets are bullding. $492150; land, $260,550; land Improvements, $67,550; and four vehicles, $144,750. 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 $31,000 salvage value. 3. Compute the depreclation expense for year 2017 on the land Improvements assuming a five-year life and double-declining-balance depreclation. Complete this question by entering your answers in the tabs below Required 1A Required 1B Required 2 Required 3 Compute the depreciation expense for year 2017 on the land improvements assuming a five-year life and double-declining- balance depreciation. preciation expense on land i ents

Explanation / Answer

Total market value = 492150+26055+67550+144750 = 965000

Value of cash price paid for land improvements = cash paid *market value of land improvements /Total market value

    = 810000*67550/965000

= $ 56700

3)Depreciation rate = 2/ useful life

       = 2/5 = .40 or 40%

Depreciation on land improvements for 2017 = 56700*.40 =$ 22680

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