On March 1, 2012, McCullough Company purchased for $300,000 a tract of land on which was located a fully equipped factory. The following information was compiled regarding this purchase:

Required:
1. Prepare the journal entry to record the purchase of these assets.
2. Assume that the building is depreciated on a straight-line basis over a remaining life of
15 years and the equipment is depreciated on a straight-line basis over six years. Neither the building nor the equipment is expected to have any salvage value. Compute the depreciation expense for 2012 assuming the assets were placed in service immediately uponacquisition.

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Fair Value Seller's Book Value Land Building .*ua* Equipment..u-.. $ 95,000 170,000 55,000 $320,000 S 80,000 130,000 70,000 $280,000 Totals