Xavier Construction negotiates a lump-sum purchase of several assets from a company that is going out of business. The purchase is completed on January 1, 2011, at a total cash price of $787,500 for a building, land, land improvements, and four vehicles. The estimated market values of the assets are building, $408,000; land, $289,000; land improvements, $42,500; and four vehicles, $110,500. The company's fiscal year ends on December 31.

Required

1. Prepare a table to allocate the lump-sum purchase price to the separate assets purchased (round percents to the nearest 1%). Prepare the journal entry to record the purchase.

2. Compute the depreciation expense for year 2011 on the building using the straight-line method, assuming a 15-year life and a $25,650 salvage value.

3. Compute the depreciation expense for year 2011 on the land improvements assuming a five-year life and double-declining-balance depreciation.