Reference no: EM132958759
Question - Complete the requirements specified for each of the following independent situations.
A. Sophia Company purchased land and an office building on March 1 for a combined cash price of $1,600,000. The land had a cost of $940,000 and the building had a book value of $200,000 on the seller's books. The land and building had fair values of $1,040,000 and $560,000, respectively on March 1. Sophia made the following entry at acquisition:
Land 940,000
Buildings 1,000,000
Gain on Purchase 140,000
Accumulated Depreciation-Buildings 200,000
Cash 1,600,000
Prepare the correct entry for the acquisition.
B. Isabella Company bought machinery on January 1, 2013 at a cost of $600,000. The machinery had an estimated life of ten years and salvage value of $50,000. On January 1, 2015, Isabella estimates that the machinery will have a life of only five more years and a $60,000 salvage value. Horton uses straight-line depreciation. Compute the revised annual depreciation.
C. Mike Company bought equipment on July 1, 2014 at a total cost of $600,000. The equipment has an estimated useful life of 5 years and salvage value of $100,000. Mike uses the double-declining-balance method of depreciation. Compute depreciation for 2014 and 2015.
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Compute the revised annual depreciation
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