Reference no: EM133164842

Question - On March 31, 2008 Delhon Industries purchased a new plant for $1,500,000 for cash. Before completing the purchase, Delhon had obtained valuations to determine the relative value of the different components purchased.

The valuation indicated that the fair value of the land, if purchased separately, would be $275,000, the building's value is $1,100,000, the manufacturing equipment $192,500, and the office and computer equipment $55,000. In addition to the land, building and equipment, the purchase price includes inventory with a net realizable value of $27,500.

The anticipated life of the building is 25 years, the manufacturing equipment 10 years, and the office and computer equipment 5 years, with no residual value for any of them. Delhon has a December 31 year end.

Required -

a) Record the purchase on March 31, 2008.

b) Record the amortization expense for 2008 using the straight line method.