Account for basket purchase. (LO 1). Warehouse Supply Corporation obtained land, a factory, and manufacturing equipment in a lump-sum purchase for $495,000. An appraisal set the value of land at $296,400, the factory at $210,900, and the equipment at $62,700. At what amount should Warehouse Supply record each new asset on its books?
SE6-19B. Calculate depreciation expense: activity method. (LO 2). Using the activity method,
calculate the first two years of depreciation expense for a piece of equipment that cost $85,000,
has an estimated useful life of 5,000,000 hours, and has an estimated salvage value of $5,000. The
number of hours used each year is as follows:
Year 1 1,250,000
Year 2 1,000,000
Year 3 650,000
Year 4 850,000
Year 5 1,250,000
SE6-20B. Calculate depreciation expense: double-declining balance. (LO 2). Using the double-declining balance method, calculate the annual depreciation expense that will be recorded each year for an asset that cost $23,000, has a useful life of eight years, and has an
estimated salvage value of $3,500. Explain what accounting issue arises, if any, in the sev- enth and eighth years.
SE6-25B. Analyze revenue and capital expenditures. (LO 4). Categorize each of the following as a capital expenditure or a revenue expenditure (expense) for Service Enterprises and explain why:
1. In accordance with the long-term maintenance plan, painted the building
2. Purchased land next to the building to expand parking
3. Remodeled building increasing its useful life
4. Performed routine maintenance on the copier machines
SE6-28B. Account for disposal of an asset. (LO 5). A machine is purchased on May 10, for $45,000. It has an expected useful life of nine years and no salvage value. After seven years, the machine is sold for $10,000 cash. What is the gain or loss on the sale?