Balter Inc. acquired Jersey Company on January 1, 20X5. When the purchase occurr

Question

Balter Inc. acquired Jersey Company on January 1, 20X5. When the purchase occurred Jersey Company had the following information related to fixed assets:

Land

$ 80,000

Building

200,000

Accumulated Depreciation

(100,000)

Equipment

100,000

Accumulated Depreciation

(50,000)

The building has a 10-year remaining useful life and the equipment has a 5-year remaining useful life. The fair value of the assets on that date were:

Land

$100,000

Building

130,000

Equipment

75,000

What is the 20X5 depreciation expense Balter will record related to purchasing Jersey Company?

a.

$8,000

b.

$15,000

c.

$28,000

d.

$30,000

PLEASE Show how to solve the problem!!!!

Land

$ 80,000

Building

200,000

Accumulated Depreciation

(100,000)

Equipment

100,000

Accumulated Depreciation

(50,000)

Explanation / Answer

Ans: C) $ 28000

Solution: Land    :    Nil

               Building:    13000 ( $130000/10 years)

               Equipment: 15000 (75000/5 Years)

Total Depreciation $ 28000                               

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