I. plant asset cost; depreciation methods ii. asset cost allocation

I. Plant Asset Cost; depreciation methods

 

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, 2013, at a total cash price of $900,000 for a building, land, land improvements and four vehicles.  The estimated market values of the assets are building – $508,800; land – $297,600; land improvements – $28, 800 and four vehicles – $124,800. The company’s fiscal year ends on December 31.

 

Required:

 

1. Prepare a table to allocate the lump-sum purchase price to the separate assets purchased (round per cents to the nearest 1%). Prepare the journal entry to record the purchase.

 

2. Compute the depreciation expense for year 2013 on the building using the straight-line method, assuming a 15-year life and a $27,000 salvage value.

 

3. Compute the depreciation expense for year 2013 on the land improvements assuming a five-year life and double-declining-balance depreciation.

 

Analysis Component

 

4. Defend or refute this statement: Accelerated depreciation results in payment of less taxes over the asset’s life.

 

 

 

II. Asset Cost Allocation; straight-line-depreciation

 

In January 2013, Mitzu Co. pays $2,600,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $644,000, with a useful life of 20 years and a $60,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $420,000 that are expected to last another 12 years with no salvage value. Without the buildings and improvements, the tract of the land is valued at $1,736,000. The company also incurs the following additional cost:

 

            Cost to demolish Building 1………………………………………….   $   328,400

 

            Cost of additional land grading………………………………………        175,400

 

            Cost to construct new building (Building 3), having a useful life

 

                        of 25 years and a $392,000 salvage value……………………     2,202,000

 

            Cost of new land improvements (Land Improvements 2) near

 

                        Building 2 having a 20-year useful life and no salvage value..       164,000

 

 

 

Required:

 

1. Prepare a table with the following column headings: Land, Building 2, Building 3, Land Improvements 1 and Land Improvements 2. Allocate the cost incurred by Mitzu to the appropriate columns and total each column (round percents to the nearest 1%).

 

2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2013.

 

3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2013when these assets were in use.

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more