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Unformatted text preview: Basket purchase Assets Fair market value % Apportionment Building 3,000,000 3,000,000/4,000,000 = 75% .75x3,600,000 = 2,700,000 Land 1,000,000 1,000,000/4,000,000 = 25% .25x3,600,000 = 900,000 Total 4,000,000 100% 3,600,000 Journal entry Building 2,700,000 Land 900,000 Cash 3,600,000 P.387 Depreciation Original cost = purchase + transportation cost + (sales tax) + insurance + installation cost Estimated useful life Estimated its salvage value – the amount expected to be received when an asset is sold Methods to calculate depreciation 1. Units of production method = cost – salvage value / total estimated life in units, hours, or miles x number of units produced x cost per unit (constant) = current year’s depreciation expenses 2. Straight line depreciation method (annual depreciation expense) = cost – salvage value / estimated useful life (years) 3. Declining balance method – (P.409) = 1/estimated life (years) x2 = DDB rate Book value = asset – accumulated depreciation...
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This note was uploaded on 09/28/2011 for the course ACC 111 taught by Professor Caprio during the Summer '11 term at Mercer County Community College.
- Summer '11
- Intangible Assets