Reference no: EM133155479
Question - A company, Spector Enterprises, noticed that a competitor was selling their assets, and approached them with a lump-sum purchase offer. For a total cash price of $904,197, the company purchased a garage with land, various land improvements and a newtruck. The estimated fair market values of the assets were: garage, $622,910; land, $304,049; land improvements, $114,446; and truck, $22,357. They completed the purchase on September 30, 2024, and the company has a December 31 year-end.
Required -
1. Allocate the lump-sum purchase price to separate assets that were purchased. Also present the general journal entry to record the purchase.
2. Calculate the 2025 depreciation expense on the garage using the straight-line method and assuming a 10-yearlife and a $38,043 salvage value.
3. Calculate the 2024 depreciation expense on the land improvements assuming an 9-year life and double-declining-balance method.
4. The truck is expected to last 5 years and have a salvage value of $2,988. Prepare a schedule showing each year's depreciation on the truck, assuming (a) 5-year straight-line depreciation and (b) double-declining-balance depreciation.
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