Reference no: EM132853840

Problem - On January 1, 2022, Norton Inc. made a basket purchase of land, a building, and furniture and fixtures. The total purchase price was $313,000. Norton also paid $3,000 for title fees and $4,000 in legal fees related to the purchase. Appraised values at the time of the purchase were: land $70,000; building, $227,500; and furniture and fixtures, $52,500.

Required -

1. Make the journal entry to record the purchase of the assets, with cost based on appraised values.

2. The building had an estimated useful life of 20 years and residual value of $30,000. Make the journal entry to record depreciation for 2022 using the declining-balance method and a 150% acceleration rate.

3. The furniture and fixtures are expected to have useful lives of 5 years and no residual value. What is the amount of depreciation on the furniture and fixtures for 2022, assuming that Norton uses the straight-line method of depreciation for such assets?

4. Based on the information in part 3, what is the book value of the furniture and fixtures at the end of 2022?

5. Under IFRS, would Norton be able to use the declining-balance method for the building and the straight-line method for furniture and fixtures? Discuss briefly.