On September 7, 20B, Belverd Corporation Purchased a Building and Land

Essay

On September 7, 20B, Belverd Corporation purchased a building and land at a total acquisition cost of $500,000. An appraiser estimated that 80% of the purchase price should be assigned to the buildin and the remainder to the land.
Required:
1. Make the journal entry for the acquisition of the land and building.
2. Make the journal entry to record depreciation of the building for 20B. Belverd takes a full month o depreciation for assets acquired in the first half of the month and uses the straight-line method. The building has a residual value of $40,000 and an estimated useful life of 20 years.
3. Based on the information in part 2, what will the book value of the building be at the end of 20C?
4. Why was it important for Belverd to separate the cost of the land and the cost of the building?