Aye Corp Acquired Land and a Building on June 1

question 62

Essay

Aye Corp acquired land and a building on June 1, 2019 for $13,000,000. An expert in real estate appraisal estimates that the land is worth 40% of the total purchase price. The building is estimated to have a useful life of 25 years and a residual value of $450,000. On September 1, 2029, Aye moved and sold the property for $17,000,000. The buyer and seller agreed that 50% of the proceeds should be allocated to land. Aye depreciates buildings using the straight-line method, and has a December 31 year-end. Aye records partial depreciation in the year of acquisition or disposal based on the number of months the asset is available for use in the year.
Prepare the entry to record the purchase on June 1, 2019, depreciation expense for 2019 and
2020, and all entries required to record the disposal of the property on September 1, 2029.

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Definitions:

Gauche Conformer

A conformation where groups are separated by a dihedral angle of approximately 60 degrees, often leading to steric hindrance.

Butane

A gaseous hydrocarbon of the alkane series, found in natural gas and used as fuel, with a formula of C4H10.

Angle Strain

A form of strain in a cyclic molecule when bond angles deviate from their ideal values, leading to extra energy stored in the compound.

Heats of Combustion

The amount of heat released when a compound undergoes complete combustion with oxygen under standard conditions.