Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $830,000. The estimated market values of the purchased assets are building, $465,600; land, $320,100; land improvements, $77,600; and four vehicles, $106,700. Required: 1-a. Allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $29,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation.
Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $830,000. The estimated market values of the purchased assets are building, $465,600; land, $320,100; land improvements, $77,600; and four vehicles, $106,700. Required: 1-a. Allocate the lump-sum purchase price to the separate assets purchased. 1-b. Prepare the journal entry to record the purchase. 2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $29,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance depreciation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $830,000. The
estimated market values of the purchased assets are building, $465,600; land, $320,100; land improvements, $77,600;
and four vehicles, $106,700.
Required:
1-a. Allocate the lump-sum purchase price to the separate assets purchased.
1-b. Prepare the journal entry to record the purchase.
2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 15-year life and a $29,000
salvage value.
3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining-balance
depreciation.
Complete this question by entering your answers in the tabs below.
Required 1A Required 1B Required 2
Allocate the lump-sum purchase price to the separate assets purchased.
Allocation of total
cost
Total cost of
Acquisition
Building
Land
Land improvements
Vehicles
Total
Required 3
Estimated
Market Value
Percent of Total
%
%
%
%
%
X
X X X X
х
Apportioned
Cost
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