Question 7 On July1, 2021, Bell Company made a lump sum purchase of an office building, including the land and some fixtures, for cash of $1,450,000. The tax assessments for the past year reflected the following: Land, $150,000; Building, $420,000; and Fixtures, S30,000. Bell believes they will use the building for another 20 years at which time they expect to sell it of $900,000. The fixtures only have a five year life and Bell expects they will have a residual value of $16,500 when they are sold. Bell depreciates their real estate holdings on a straight line basis. All fixtures are depreciated using declining balance method. a. Prepare the journal entry to record the acquisition. Show your work. b. Prepare any year end adjustments required. c. Show how the assets will be presented on the December 31, 2021 financial statements.

Question 7 On July1, 2021, Bell Company made a lump sum purchase of an office building, including the land and some fixtures, for cash of $1,450,000. The tax assessments for the past year reflected the following: Land, $150,000; Building, $420,000; and Fixtures, S30,000. Bell believes they will use the building for another 20 years at which time they expect to sell it of $900,000. The fixtures only have a five year life and Bell expects they will have a residual value of $16,500 when they are sold. Bell depreciates their real estate holdings on a straight line basis. All fixtures are depreciated using declining balance method. a. Prepare the journal entry to record the acquisition. Show your work. b. Prepare any year end adjustments required. c. Show how the assets will be presented on the December 31, 2021 financial statements.

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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