PPP-LO1 (1).pdfQuestions:1. Is carrying value ever the same as market value?2. What incentive does a company have to allocate more of a group purchaseprice to land than to building?3. Gallon Auto purchased a neighboring lot for a new building and parking lot.Indicate whether each of the following expenditures is properly charged to (a)Land, (b) Land Improvements, or (c) Buildings:a. Paving costsb. Architects' fee for building designc. Cost of clearing the propertyd. Cost of the propertye. Building construction costsaround the propertyg. Building permith. Interest on the construction loan4. Cergo Computers constructed a new training center in 2014, which you havebeen hired to manage. A review of the accounting records shows the followingexpenditures debited to an asset account called Training Center:Attorney's fee, land acquisitionCost of landArchitect's fee, building designBuildingParking lot and sidewalkElectrical wiring, buildingLandscapingCost of surveying landTraining equipment, tables, and chairsInstallation of training equipmentCost of grading the landCost of changes in building to soundproof roomsTotal account balance$ 34,900598,000102,0001.020.000135,600164,00055,0009,200136,40068,00014,00059.200$2,396,300During the center's construction, an employee of Cergo worked full-timeoverseeing the project. He spent two months on the purchase and preparationof the site, six months on the construction, one month on land improvements,and one month on equipment installation and training-room furniture purchaseand setup. His salary of $64,000 during this ten-month period was charged toAdministrative Expense. The training center was placed in operation onNovember 1Required1. Prepare a schedule with the following four column (account) headings:Land, Land Improvements, Building, and Equipment. Place each of theabove expenditures in the appropriate column. Total the columns.2. What impact does the classification of the items among several accountshave on evaluating the profitability performance of the company?

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Answered: 1. Is carrying value ever the same as…

Business

Accounting

1. Is carrying value ever the same as market valuc?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 53P

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