Units of production and declining balance methods

Reference no: EM13914562

Problem 8-1A Plant asset costs; depreciation methods LO C1, P1

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 $830,000 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $450,800; land, $313,600; land improvements, $68,600; and four vehicles, $147,000. 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.

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 $30,000 salvage value.Compute and record depreciation using the straight-line, units-of-production, and declining-balance methods.

Problem 8-1A Plant asset costs; depreciation methods LO C1, P1Learning Objective: 08-C1 Explain the cost principle for computing the cost of plant assets.

eBook: Cost DeterminationeBook: Depreciation Methods

Reference no: EM13914562

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