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.
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.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 2EB: Johnson, Incorporated had the following transactions during the year: Purchased a building for...
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Question
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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