On January 1,2014,Aaron Simpson Bought a Farm Store of a Small

question 109

Essay

On January 1,2014,Aaron Simpson bought a farm store of a small competitor for $620,000.An appraiser,hired to assess the acquired assets' value,determined that the land,building,and equipment had market values of $300,000,$215,000,and $270,000,respectively.
REQUIRED:
1.What is the acquisition cost of each asset? Prepare a journal entry to record the acquisition.
2.Simpson plans to depreciate the building on a straight-line basis for 30 years and the equipment over 16 years .Determine the amount of depreciation expense for 2014 on these newly acquired assets.You can assume zero residual value for all assets.
3.How would the assets appear on the balance sheet as of December 31,2014?

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Definitions:

Chi-square Test of Homogeneity

A nonparametric statistical test used to determine if there are significant differences between the distributions of categorical variables across different populations.

Binomial Experiment

A statistical experiment that meets the criteria of having a fixed number of trials, only two possible outcomes, independence between trials, and a constant probability of success.

Goodness-of-fit Test

A statistical test used to determine how well observed data fit the expected distribution.

Two-way Classification

A method of organizing data that involves two independent variables to understand the relationship between them and their impact on a dependent variable.