Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $820,000. The estimated market values of the purchased assets are building, $547,250, land, $308,450, land improvements, $29,850, and four vehicles, $109,450. 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.

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 $820,000. The estimated market values of the purchased assets are building, $547,250, land, $308,450, land improvements, $29,850, and four vehicles, $109,450. 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.

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