Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 11, Problem 11.3P
a.
To determine
To prepare: The required
b.
To determine
The effect of the journal entry on the current year income statement, balance sheet , and cash flow statement under both the direct and indirect method.
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Nagy Company makes a lump-sum purchase of several assets on January 1 at a total cash price of $1,800,000. The estimated market values of the purchased assets are building, $890,000; land, $427,200; land improvements, $249,200; and five trucks, $213,600. Required 1. Allocate the lump-sum purchase price to the separate assets purchased. Prepare the journal entry to record the purchase. 2. Compute the first-year depreciation expense on the building using the straight-line method, assuming a 12-year life and a $120,000 salvage value. 3. Compute the first-year depreciation expense on the land improvements assuming a 10-year life and double-declining-balance depreciation. Analysis Component 4. Compared to straight-line depreciation, does accelerated depreciation result in payment of less total taxes over the asset’s life?
Timberly Construction makes a lump-sum purchase of several assets on January 1 at a total cash price of $840,000. The
estimated market values of the purchased assets are building, $484, 500; land, $304,000; land improvements, $66,500;
and four vehicles, $95,000. Required: 1-a. Allocate the lump-sum purchase price to the separate assets purchased. 1 -
b. Prepare the journal entry to record the purchase. 2. Compute the first-year depreciation expense on the building
using the straight-line method, assuming a 15-year life and a $30,000 salvage value. 3. Compute the first-year
depreciation expense on the land improvements assuming a five-year life and double-declining - balance depreciation.
Current Attempt in Progress
These expenditures were incurred by Cullumber Company in purchasing land: cash price $60,010, assumed accrued taxes $5,490,
attorney's fees $2,260, real estate broker's commission $3,960, and clearing and grading $4,220.
What is the cost of the land?
The cost of the land
$
Chapter 11 Solutions
Intermediate Accounting
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