lump sum purchase to add to his growing chain of grocery 253303

Lump-Sum Purchase To add to his growing chain of grocery stores, on January 1, 2010, Danny Marks bought a grocery store of a small competitor for $520,000. An appraiser, hired to assess the acquired assets’ value, determined that the land, building, and equipment had market values of $200,000, $150,000, and $250,000, respectively.


1. What is the acquisition cost of each asset? Identify and analyze the effect of the acquisition.

2. Danny plans to depreciate the operating assets on a straight-line basis for 20 years. Determine the amount of depreciation expense for 2010 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, 2010?

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