1. Milton Company purchased land and an office building on September 1 for a combined cash price of $2,200,000.

1. Milton Company purchased land and an office building on September 1 for a combined cash price of $2,200,000. The land had a cost of $1,300,000 and the building had a book value of $1,030,000 on the seller's books. The land and building had fair market values of $1,400,000 and $800,000, respectively on September 1.

Milan made the following entry at acquisition:

Land ................................................................. 1,300,000

Building ............................................................ 1,700,000

Gain on Purchase ................................................ 130,000

Accumulated Depreciation .................................... 670,000

Cash ..................................................................................... 2,200,000

Prepare the correct entry for the acquisition.

2. Neville Company bought machinery on January 1, 2010 at a cost of $400,000. The machinery had an estimated life of 8 years and salvage value of $20,000. In January 2013, Neville estimates that the machinery will have a life of only 4 more years and an $18,000 salvage value. Norton uses straight-line depreciation. Compute the revised annual depreciation.

3. Carley Company bought equipment on April 1, 2012 at a total cost of $220,000. The equipment has an estimated useful life of 4 years and salvage value of $40,000.  Farley uses the double-declining-balance method of depreciation. Compute depreciation for 2012 and 2013.