Hello I would like some help in understanding where the numb

Hello! I would like some help in understanding where the numbers plug in

[The following information applies to the questions displayed below. Bridge City Consulting bought a building and the land on which It Is located for $155,000 cash. The land Is estimated to represent 70 percent of the purchase price. The company pald $10,000 for building renovations before it was ready for use. Required: 2. Prepare the journal entry to record all expenditures. Assume that all transactions were for cash and they occurred at the start of the year. (If no entry is required for a transaction/event, select \"No Journal Entry Required\" in the first account field.) View transaction list Journal entry worksheet Record all expenditures for the land and buildings assuming all transactions were paid for with cash and occurred at the start of the year. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Solution

1)

2)

a)straight line method: Depreciation expense [cost -residual value]/useful life

                       = [29000-3500]/5

                      = $ 5100

Unit of production:

Depreciation expense : [cost-residual value]/useful life in unit

                    =[29000-3500]/10000

                    = $ 2.55 per unit

Double declining method:

Rate = 2/ useful life

         = 2/5

          =.40 or 40%

Depreciation for year5 is restricted to 258.4 as salvage required at year end 3500

2b)Depreciation under straightline method is lowest for year 2 which in turn results in highest Income.

correct option is \"B\"

2c)No,Higher Net Income does not mean that machine is efficiently used .Since each method produce different result in each year.

Account title	Debit	credit
Land [155000*.70]	108500
Building [155000-108500 land] +10000	56500
cash		165000