Balter Inc. acquired Jersey Company on January 1, 20X5. When the purchase occurred Jersey Company had the following information related to fixed assets: $\begin{array}{lr}
\text { Land } & \$ 80,000 \
\text { Building } & 200,000 \
\text { Accumulated Depreciation } & (100,000) \
\text { Equipment } & 100,000 \
\text { Accumulated Depreciation } & (50,000)
\end{array}$ The building has a 10-year remaining useful life and the equipment has a 5-year remaining useful life. The fair value of the assets on that date were:
$\begin{array}{lr}
\text { Land } & \$ 100,000 \
\text { Building } & 130,000 \
\text { Equipment } & 75,000
\end{array}$ What is the 20X5 depreciation expense Balter will record related to purchasing Jersey Company?

Question

Quizplus · Accepted Answer

The depreciation expense for the building is $13,000 (($130,000 - $100,000) / 10 years). The depreciation expense for the equipment is $15,000 (($75,000 - $100,000) / 5 years). The total depreciation expense is $28,000 ($13,000 + $15,000).

Balter Inc The Building Has a 10-Year Remaining Useful Life and the the Purchase