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Chapter 9 Lecture Problems

# Chapter 9 Lecture Problems - Chapter 9 Exercise 1(1 of 4 On...

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Chapter 9 – Exercise 1 (1 of 4) On January 1, 20A, Coopers Industries bought a parcel of land and a building for use in its operations by paying the seller \$100,000 in cash, signing a five year, 12% note payable in the amount of \$100,000, and issuing 3,000 shares of Coopers Industries common shares (\$100 per share market value). In connection with the purchase of the land and building, Coopers incurred legal fees of \$19,000, a real estate agent sales commission of \$25,000, surveying fees of \$1,000, and an appraisal fee of \$5,000 in connection with the purchase. In addition, Coopers Industries prepaid its 20A insurance premium on the property in the amount of \$12,500. All amounts notes above were paid in cash. At the time of the acquisition, the land was appraised at \$240,000 and the building at \$360,000. The building had an estimated useful life of 30 years and an estimated residual value of \$37,000. The company uses the straight-line method to determine its annual depreciation expense.

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Chapter 9 – Exercise 1 (2 of 4) Part A: Compute the total acquisition cost relating to this basket purchase and apportion the total acquisition cost to the land and building.
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