Pointer Company buys a piece of property in north Toronto that has the following costs associated with
Question:
Pointer Company buys a piece of property in north Toronto that has the following costs associated with the purchase:
Invoice price for land and building = $906,000 Legal fees associated with the purchase = $16,000 Unpaid property taxes assumed by Pointer as part of the purchase agreement = $48,000 Cost of having property professionally appraised = $17,600
The appraisal report shows the building has an appraised market value of $600,000 and the land has an appraised value of $160,000.
Required 1: What amount should be capitalized as the value of the land on Pointer's book? $
Required 2: What amount should be capitalized as the value of the building on Pointer's book? $
Required 3: If the property acquired will be depreciated in 40 years with no residual value (assume the straight-line depreciation is used), what is the depreciation expense for the first full year of use? $
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe