50.1K

Verified Solution

Link Copied!

On March 1, 2018, Wall Company paid $900,000 in cash to purchase land, a building and equipment. The appraised fair market values of the assets were as follows: land, $297,600; building, $508,800; and equipment, $153,600. Before the facilities could be used, Wall had to spend $24,000 to legal fees and $12,500 to grade and landscape the land, $10,000 to install equipment for use, and $25,000 to renovate the building. The equipment was then estimated to have a useful life of 8 years with no salvage value, and the building would have a useful life of 25 years with net salvage value of $45,000. Both the equipment and the building are to be depreciated on straight-line basis. The company is on a calendar-year reporting basis. Required: 1. Allocate the lump-sum purchase price to the individual assets acquired. 2. Prepare the journal entry to record the transactions of purchase the land, building, and equipment and the amount incurred to get them into operation. 3. Prepare the journal entries on December 31, 2019, to record the depreciation on the building and equipment. 4. On May 31, 2020 the Equipment's disposal. Prepare journal entries to record the equipment's disposal under each of the following separate as sumptions: a. It is sold for $120,000 cash b. It is sold for $ 86,000 cash. $

Answer & Explanation Solved by verified expert

See Answer