A 300,000-square-foot building was acquired for $3,600,000. The values determined for each of the components acquired were:
Question:
A 300,000-square-foot building was acquired for $3,600,000. The values determined for each of the components acquired were:
Components | Values | Estimated life |
Land | $1,000,000 | No estimate |
Building, if vacant | 2,000,000 | 40 years |
Tennant relationships | 250,000 | No estimate |
In-place leases | 350,000 | 6 years |
Above-market leases | 180,000 | 4 years |
Below-market leases | (90,000) | 8 Years |
TOTAL | $3,690,000 |
Required:
1. Prepare a table showing the allocation of the purchase price to the individual assets acquired.
2. Show the journal entry (oer entries) that the purchaser would record to journalize the purchase (please use proper journal entry formatting).
3. Show the journal entry (or entries) that the purchaser would record to journalize all the depreciation/amortization to be taken for the first year of ownership of the building, assuming the purchase took place on January 1 and the purchaser prepares financial statements annually on December 31. (assume no prior adjusting entries were made with regards to depreciation/amortization and use proper journal entry formatting).
Human Resource Management
ISBN: 978-0132553001
12th edition
Authors: Wayne Dean Mondy, Judy Bandy Mondy