ACCOUNTING-Timberly Construction negotiates a lump-sum purchase of several assets

QUESTION

Timberly Construction negotiates a lump-sum purchase of several assets from a company that is going out of business. The purchase is completed on January 1, 2015, at a total cash price of $840,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $434,700; land, $302,400; land improvements, $37,800; and four vehicles, $170,100. The company’s fiscal year ends on December 31. Required:1.1Prepare a table to allocate the lump-sum purchase price to the separate assets purchased. 1.2Prepare the journal entry to record the purchase. 2.Compute the depreciation expense for year 2015 on the building using the straight-line method, assuming a 15-year life and a $31,000 salvage value. (Round your answers to the nearest whole dollar.) 3.Compute the depreciation expense for year 2015 on the land improvements assuming a five-year life and double-declining-balance depreciation.

ANSWER:

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