Chapter 8 Essay

1282 Words Dec 20th, 2013 6 Pages
Columbia Company, which manufactures machine tools, had the following transactions related to plant assets in 2014.
Asset A: On June 2, 2014, Columbia purchased a stamping machine at a retail price of $12,000. Columbia paid 6% sales tax on this purchase. Columbia paid a contractor $2,800 for a specially wired platform for the machine, to ensure noninterrupted power to the machine. Columbia estimates the machine will have a 4-year useful life, with a salvage value of $2,000 at the end of 4 years. The machine was put into use on July 1, 2014.
Asset B: On January 1, 2014, Columbia, Inc. signed a fixed-price contract for construction of a warehouse facility at a cost of $1,000,000. It was estimated that the project will be completed by
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Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Land Buildings Machinery and Equipment Other
Abstract company’s fee for title search $ $ $ $

Architect’s fees

Cash paid for land and old building

Removal of old building

Interest on short-term loans during construction

Excavation before construction for basement

Machinery purchased (subject to 2% cash discount, which was not taken). Company uses net method to record discount.

Freight on machinery purchased

Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered

New building constructed (building

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