plant, and Equipment ac cornect Construction negotiates a lump-sum purchase of s
ID: 2580883 • Letter: P
Question
plant, and Equipment ac cornect Construction negotiates a lump-sum purchase of several assets from a company that is going out PROBLEM SET A urchase is completed on January 1, 2017, at a total cash price of $900,000 for a build- rovements, and four vehicles. The estimated market values of the assets are building, business. The and. ·land ,600: land improvements, $28,800; and four vehicles, $124,800. The company's fis- Plant asset costs; 08. 800; lan Problem 10-1A ends on December 31. al year depreciation methods C1 P1 Required . Prepare a table to allocate the lump-sum purchase price to the separate assets pu rchased (round per- to the nearest 1%). Prepare the journal entry to record the purchase 2 Compute the depreciation expense for year 2017 on the building using the straight-line method, as- Check (2) $30,000 sming a 15-year life and a $27,000 salvage value. . Compute the depreciation expense for year 2017 on the land improvements assuming a five-year life and double-declining-balance depreciation 3) $10,800 ndlysis Component 4 Defend or refute this statement: Accelerated depreciation results in payment of less taxes over the asset's life.Explanation / Answer
a)
b)Depreciation on building =[ cost-salvage]/useful life
= [477000-27000]/15
=30000
c)Depreciation rate = 2 /useful life
= 2/5 = .40 or 4 0%
Deprecition on land improvements =27000*.40=10800
Market value Weight Amount allocated Building 508800 508800/960000= .53 900000*.53=477000 Land 297600 297600/960000= .31 900000*.31=279000 Land improvements 28800 28800/960000= .03 900000*.03=27000 Vehicle 124800 124800/960000= .13 900000*.13=117000 960000Related Questions
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