On April 1, 2003, Rosenberg Company purchased for $200,000 a tract of land on which was located a fully equipped factory. The following information was compiled regarding this purchase:
|
Market |
Seller s |
|
|
Value |
Book Value |
|
|
Land |
$75,000 |
$30,000 |
|
Building . |
100,000 |
75,000 |
|
Equipment |
50,000 |
60,000 |
|
Totals . |
$225,000 |
$165,000 |
1. Prepare the journal entry to record the purchase of these assets.
2. Assume that the building is depreciated on a straight line basis over a remaining life of 20 years and the equipment is depreciated on a straight line basis over five years. Neither the building nor the equipment is expected to have any salvage value. Compute the depreciation expense for 2003 assuming the assets were placed in service immediately upon acquisition.