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AC1220 Lab 5

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AC1220 Lab 5.1;Introduction;Jake determines that owning the building where Jake?s Computer Sales and Repair operates makes more sense than leasing the facility. On June 1, 20x1, Jake exchanges a \$180,000 note payable for the following fixed assets;? Land;? Land improvements, including fencing, paving, lighting, and signage;? Building;Jake hires an independent appraiser who assigns the following market values to the assets;Asset;Fair Market Value;Land;\$23,500;Land improvements;\$8,000;Building;\$164,500;Requirement 1;Jake must allocate the \$195,000 among three asset classes: land, land improvements, and building.;a. Compute the total fair market value (FMV) of the lump-sum purchase of assets.;Asset;Fair Market Value;Land;\$23,500;Land improvements;8,000;Building;164,000;Total;b. Express land improvements and building as a percentage of the total FMV and allocate the purchase price of \$180,000 to land improvements and building?the computation is completed for land.;Asset;Fair Market Value;% of Total Fair Market Value;Purchase Price;Cost of Asset;Land;\$23,500;12%;\$180,000;\$21,600;Land improvements;180,000;Building;180,000;Total;c. Journalize the purchase of the assets, using the allocated costs computed in Requirement 1b.;Date;Account and Explanation;Debit;Credit;6/1/x1;To record purchase of land, land improvements, and building;Requirement 2;a. Classify each of the following spending items as either a capital expenditure or an expense. Indicate the correct choice with an ?x?;Spending;Capital Expenditure;Expense;Routine repairs to fencing, \$120 (cash);Renovation of building, including addition to warehouse, \$15,000 (on account);Resurfaced paving, extending the remaining useful life of the paving from 3 to 5 years, \$1,000 (cash);b. Journalize the expenditures described in Requirement 2a.;Date;Account and Explanation;Debit;Credit;6/1/x1;To record repairs to fencing;6/1/x1;To record renovation of building;6/1/x1;To record extraordinary repair;Requirement 3;a. Using the straight-line depreciation method, compute the depreciation expense and the accumulated depreciation that would be recorded at December 20x1. Completing the shaded cells in the following table;Date;Asset Cost;Depreciable Cost;Straight-line Depreciation Rate;Depreciation Expense;Accumulated Depreciation;Book Value;Jun 1, 20x1;1/5 x 6/12

Paper#80937 | Written in 18-Jul-2015

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