Reference no: EM132808393

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:

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

Problem 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.

Problem 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?

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

Problem 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.