Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $840,000. The estimated market values of the purchased assets are building, $484, 500; land, $304,000; land improvements, $66, 500; and four vehicles, $95,000. 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 $30,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double - declining - balance depreciation.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $840,000. The
estimated market values of the purchased assets are building, $484, 500; land, $304,000; land improvements, $66,500;
and four vehicles, $95,000. 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 $30,000 salvage value. 3. Compute the first-year
depreciation expense on the land improvements assuming a five-year life and double-declining - balance depreciation.
Transcribed Image Text:Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $840,000. The estimated market values of the purchased assets are building, $484, 500; land, $304,000; land improvements, $66,500; and four vehicles, $95,000. 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 $30,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a five-year life and double-declining - balance depreciation.
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