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Chapter 7 Depreciation, Asset Disposal, Goodwill, Basket

Chapter 7 Depreciation, Asset Disposal, Goodwill, Basket -...

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1. Basket Purchase Example Carter buys a building, the land it sits on, the furniture in it and a storage shed in the back for $1,000,000. And independent appraisal determines that the fair market value (FMV) of the assets are as follows: Building $450,000 Land $270,000 Furniture $190,000 Shed $145,000 Prepare the journal entry to record this purchase on Carter’s balance sheet assuming she paid cash. 2. Straight line Depreciation Example Macon has a truck, which he purchased on January 1, 2006 for $30,000. He thinks that it will last 5 years and be worth $5,000 at the end of that five years. What is depreciation expense in 2006? In 2007? What is the balance in A/D at the end of 2007? What is the book value of the truck at the end of 2007? Macon also purchased a Caterpillar tractor on July 1, 2006 for $150,000 and paid $25,000 for delivery and decided to paint it purple to match his company logo which cost $10,000. He thinks that the tractor will have a life of 10 years and be worth $25,000 at the end of that 10 years. What is depreciation expense in 2006? In 2007?
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