Prepare the journal entry to record the purchase of property

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Question - Computing and Recording Cost and Depreciation of Assets

Corrin Company bought a building for $79,000 cash and the land on which it was located for $115,000 cash. The company paid transfer costs of $17,000 ($7,000 for the building and $10,000 for the land). Renovation costs on the building were $30,000.

Required -

1. Prepare the journal entry to record the purchase of the property, including all expenditures. Assume that all transactions were for cash and that all purchases occurred at the start of the year.

2. Compute straight-line depreciation at the end of one year, assuming an estimated 10-year useful life and a $12,000 estimated residual value.

3. What will be the net book value of the property (land and building) at the end of year 2?

Reference no: EM132489140

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