Question

True Light Electricity Company purchased land for $180,000 cash and a building for $420,000 cash. The company paid attorney fees of $22,000 associated with the purchase and allocated that cost to the building and the land based on the purchase price. Redesign costs on the building were $52,000.
Use the accounting equation to record the purchase of the property, including all related expenditures. Assume that all transactions were for cash and that all purchases occurred at the beginning of the year.
1. Compute the annual straight-line depreciation, assuming a 25-year estimated useful life and a $17,400 estimated salvage value for the building.
2. What would the book value of the building be at the end of the third year?
3. What would the book value of the land be at the end of the third year?



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  • CreatedSeptember 01, 2014
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