Pointer Company buys a piece of property in north Toronto that has the following costs associated with the purchase:Invoice price for land and building = $303,500Legal fees associated with the purchase = $12,000Unpaid property taxes assumed by Pointer as part of the purchase agreement = $28,000Cost of having property professionally appraised = $10,350The appraisal report shows the building has an appraised market value of $400,000 and the land has an appraised value of $100,000.Required 1: What amount should be capitalized as the value of the land on Pointer's book? $Required 2: What amount should be capitalized as the value of the building on Pointer's book? $Required 3: If the property acquired will be depreciated in 40 years with no residual value (assume the straight-line depreciation isused), what is the depreciation expense for the first full year of use? $

As per standard accounting practices when we purchase an asset , all…

Answered: Pointer Company buys a piece of…

Business

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Pointer Company buys a piece of property in north Toronto th

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Pointer Company buys a piece of property in north Toronto that has the following costs associated with the purchase:
Invoice price for land and building = $303,500
Legal fees associated with the purchase = $12,000
Unpaid property taxes assumed by Pointer as part of the purchase agreement = $28,000
Cost of having property professionally appraised = $10,350
The appraisal report shows the building has an appraised market value of $400,000 and the land has an appraised value of $100,000.
Required 1: What amount should be capitalized as the value of the land on Pointer's book? $
Required 2: What amount should be capitalized as the value of the building on Pointer's book? $
Required 3: If the property acquired will be depreciated in 40 years with no residual value (assume the straight-line depreciation is
used), what is the depreciation expense for the first full year of use? $

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