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The Kristopher Corporation, a manufacturer of steel products, began operations on January 1, 2020. They have a December 31 year-end. The following information has been attained from the companys records and personnel:

i. Depreciation is computed from the first of the month of acquisition to the first of the month of disposition.

ii. Residual value is assumed, unless stated differently, as follows: Buildings 5% Equipment & Machinery 10%

iii. Estimated useful lives and depreciation method is assumed, unless stated differently, as follows: Buildings 40 years SL Equipment & Machinery 10 years DDB

Required:

a. Land A and Building A were acquired on January 1, 2021 from a predecessor corporation. Kristopher paid $1,012,000 for the land and building together. The total cost was allocated between land and building as follows: Land $200,000 and Building $812,000. Calculate the book value of the building at December 31, 2021.

b. Land B was acquired on January 2, 2021, in exchange for $150,000. During January 2021, Kristopher paid $15,000 to demolish an existing building on this land so it could construct a new building. However, they received $2,000 from the sale of the salvaged material. Calculate the amount that Kristopher should capitalize for Land B.

c. Equipment was acquired on January 2, 2020 for $25,000. Calculate the book value of the equipment as of December 31, 2021.

d. Machine As total cost (acquired on January 1, 2020) of $150,000 includes installation charges of $550 and normal repairs and maintenance of $10,000. Machine A was sold on February 1, 2021 for $75,000. Calculate the gain or loss that should be recorded on the sale of the machinery.

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