Problem $8-1$B Plant asset costs; depreciation

methods C$1$ P$1$

Nagy Company makes a lump$-$sum purchase of several assets on January $1$

at a total cash price of $$1,800,000.$ The estimated market values of the

purchased assets are building, $$890,000$; land, $$427,200$; land

improvements, $$249,200$; and five trucks, $$213,600.$

Required

Allocate the lump$-$sum purchase price to the separate assets

purchased. Prepare the journal entry to record the purchase.

Compute the first$-$year depreciation expense on the building using the

straight$-$line method, assuming a $12-$year life and a $$120,000$ salvage

value.

Check $(2)$ $$65,000$

Compute the first$-$year depreciation expense on the land

improvements assuming a $10-$year life and double$-$declining$-$balance

depreciation.

Analysis Component

Compared to straight$-$line depreciation, does accelerated depreciation

result in payment of less total taxes over the asset's life?