Author Question: Peterson Company purchased land, building, and equipment for a total cash price of 900,000. An ... (Read 174 times)

imowrer

  • Hero Member
  • *****
  • Posts: 514
Peterson Company purchased land, building, and equipment for a total cash price of 900,000.
 
  An independent appraiser told management that if the assets had been acquired separately, the company would have paid 300,000, 700,000, and 200,000, respectively, for each of the assets purchased. Write your answers on the lines provided and show your work in the space provided below each question.
 
  1. Use the relative fair market value method to determine how much of the 900,000 purchase price should be used for each of the three separate assets.
  ______________ should be used for the cost of the land.
  ______________ should be used for the cost of the building.
  ______________ should be used for the cost of the equipment.
 
  2. Determine how much depreciation expense the company will have each full year using the straight-line method and the following assumptions:
   The building has a 30-year useful life and a zero salvage value.
   The equipment has an 8-year useful life and a 50,000 salvage value.
  ______________ annual depreciation expense for the building
  ______________ annual depreciation expense for the equipment

Question 2

The amount of the adjusted balance appearing on the bank reconciliation as of a given date is the amount that isshown on the balance sheet for that date.
 a. True
  b. False
 
   Indicate whether the statement is true or false



leeeep

  • Sr. Member
  • ****
  • Posts: 315
Answer to Question 1

1. The total fair market value of the assets if they had been purchased separately is: 300,000 + 700,000 + 200,000 = 1,200,000.
Land: (300,000/1,200,000) x 900,000 = 225,000
Building: (700,000/1,200,000) x 900,000 = 525,000
Equipment: (200,000/1,200,000) x 900,000 = 150,000
2. Depreciation for the building: 525,000/30 = 17,500
Depreciation for the equipment: (150,000-50,000)/8 = 12,500

Answer to Question 2

True



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

When blood is deoxygenated and flowing back to the heart through the veins, it is dark reddish-blue in color. Blood in the arteries that is oxygenated and flowing out to the body is bright red. Whereas arterial blood comes out in spurts, venous blood flows.

Did you know?

People often find it difficult to accept the idea that bacteria can be beneficial and improve health. Lactic acid bacteria are good, and when eaten, these bacteria improve health and increase longevity. These bacteria included in foods such as yogurt.

Did you know?

Bisphosphonates were first developed in the nineteenth century. They were first investigated for use in disorders of bone metabolism in the 1960s. They are now used clinically for the treatment of osteoporosis, Paget's disease, bone metastasis, multiple myeloma, and other conditions that feature bone fragility.

Did you know?

In inpatient settings, adverse drug events account for an estimated one in three of all hospital adverse events. They affect approximately 2 million hospital stays every year, and prolong hospital stays by between one and five days.

Did you know?

The effects of organophosphate poisoning are referred to by using the abbreviations “SLUD” or “SLUDGE,” It stands for: salivation, lacrimation, urination, defecation, GI upset, and emesis.

For a complete list of videos, visit our video library