Ben Sisko Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.Abstract company’s fee for title search $000520Architect’s fees 3,170Cash paid for land and dilapidated building thereon 87,000Removal of old building$20,000 000Less: Salvage0005,50014,500Interest on short-term loans during construction 7,400Excavation before construction for basement 19,000Machinery purchased (subject to 2% cash discount, which was not taken) 55,000Freight on machinery purchased 1,340Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered 2,180New building constructed (building construction took 6 months from date of purchase of land and old building) 485,000Assessment by city for drainage project 1,600Hauling charges for delivery of machinery from storage to new building 620Installation of machinery 2,000Trees, shrubs, and other landscaping after completion of building (permanent in nature) 5,400InstructionsDetermine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Indicate how any costs not debited to these accounts should be recorded.

Question
Asked Feb 11, 2020
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Ben Sisko Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.

Abstract company’s fee for title search  
$000520
Architect’s fees  
3,170
Cash paid for land and dilapidated building thereon  
87,000
Removal of old building
$20,000
 
000Less: Salvage
0005,500
14,500
Interest on short-term loans during construction  
7,400
Excavation before construction for basement  
19,000
Machinery purchased (subject to 2% cash discount, which was not taken)  
55,000
Freight on machinery purchased  
1,340
Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered  
2,180
New building constructed (building construction took 6 months from date of purchase of land and old building)  
485,000
Assessment by city for drainage project  
1,600
Hauling charges for delivery of machinery from storage to new building  
620
Installation of machinery  
2,000
Trees, shrubs, and other landscaping after completion of building (permanent in nature)  
5,400

Instructions

Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Indicate how any costs not debited to these accounts should be recorded.

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Assets: These are the resources owned and controlled by business and used to produce benefits for the company. Assets are classified o...

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