What should be the book value of the land

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Bridge City Consulting bought a building and the land on which it is located for $ 182,000 cash. The land is estimated to represent 70 percent of the purchase price. The company paid $ 22,000 for building renovations before it was ready for use.

Required:

1. Explain how the renovation costs should be accounted for.

2. Give the journal entry to record all expenditures. Assume that all transactions were for cash and they occurred at the start of the year.

3. Compute straight- line depreciation on the building at the end of one year, assuming an estimated 12- year useful life and a $ 4,600 estimated residual value.

4. What should be the book value of (a) the land and (b) the building at the end of year 2?  

Reference no: EM13868203

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