Exercise 11.18 BUILDING COSTS ** Chua Ltd has acquired a new building. Which of the following items should be included in the cost of the building? (a) Stamp duty (b) Real estate agent's fees (c) Architect's fees for drawings for internal adjustments to the building to be made before use (d) Interest on the bank loan to acquire the building, and an application fee to the bank to get the loan, which is secured on the building (e) Cost of changing the name on the building (f) Cost of changing the parking bays (g) Cost of refurbishing the lobby to the building to attract customers and make it more user friendly

Exercise 11.18 BUILDING COSTS ** Chua Ltd has acquired a new building. Which of the following items should be included in the cost of the building? (a) Stamp duty (b) Real estate agent's fees (c) Architect's fees for drawings for internal adjustments to the building to be made before use (d) Interest on the bank loan to acquire the building, and an application fee to the bank to get the loan, which is secured on the building (e) Cost of changing the name on the building (f) Cost of changing the parking bays (g) Cost of refurbishing the lobby to the building to attract customers and make it more user friendly

Corporate Financial Accounting

15th Edition

ISBN:9781337398169

Author:Carl Warren, Jeff Jones

Publisher:Carl Warren, Jeff Jones

Chapter9: Long-Term Assets: Fixed And Intangible

Section: Chapter Questions

Problem 9.4TIF

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Allocating payments and receipts to fixed asset accounts The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search 3,600 b. Cost of real estate acquired as a plant site: Land 720,000 Building (to be demolished) 60,000 c. Finders fee paid to real estate agency 23,400 d. Delinquent real estate taxes on property, assumed by purchaser 15,000 e. Architects and engineers fees for plans for new building 75,000 f. Cost of removing building purchased with land in (b) 10,000 g. Proceeds from sale of salvage materials from old building 3,400 h. Cost of filling and grading land 18,000 i. Premium on one-year insurance policy during construction. 8,400 j. Money borrowed to pay building contractor 800,000 k. Special assessment paid to city for extension of water main to the property 13,400 1. Cost of repairing windstorm damage during construction 3,000 m. Cost of repairing vandalism damage during construction 2,000 n. Cost of trees and shrubbery planted 14,000 o. Cost of paving parking lot to be used by customers 21,600 p. Interest incurred on building loan during construction 40,000 q. Proceeds from insurance company for windstorm and vandalism damage 4,500 r. Payment to building contractor for new building 800,000 s. Refund of premium on insurance policy (i) canceled after 10 months 1,400 Instructions 1.Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Indicate receipts by an asterisk. Identify each item by letter and list the amounts in columnar form, as follows: Item Land Land Improvements Building Other Accounts 2.Determine the amount debited to Land, Land Improvements, and Building. 3.The costs assigned to the land, which is used as a plant site, will not be depreciated, while the costs assigned to land improvements will be depreciated. Explain this seemingly contradictory application of the concept of depreciation. 4.What would be the effect on the current years income statement and balance sheet if the cost o f paving the parking lot o f 21,600 [payment (o)] was incorrectly classified as Land rather than Land Improvements? Assume that Land Improvements are depreciated over a 10-year life using the double-declining-balance method.
Q1 Galah Ltd has acquired a new building. Assess which of the following items should beincluded in the cost of the building. Provide a reason for your conclusions.(a) Stamp duty(b) Real estate agent’s fees(c) Architect’s fees for drawings for internal adjustments to the building to be made before use(d) Interest on the bank loan to acquire the building, and an application fee to the bank to get the loan, which is secured on the building(e) Cost of changing the name on the building(f) Cost of changing the parking bays(g) Cost of refurbishing the lobby to the building to attract customers and make it more user friendly
Q2 Corella Ltd has acquired a new machine which it has had installed in its factory. Assess which of the following items should be capitalised into the cost of the building. Provide a reason for your conclusions.(a) Labour and travel costs for managers to inspect possible new machines and for negotiating for a new machine(b) Freight costs and insurance to get the new machine to the factory(c) Costs for renovating a section of the factory, in anticipation of the new machine’s arrival, to ensure that all the other parts of the factory will have easy access to the new machine(d) Cost of cooling equipment to assist in the efficient operation of the new machine(e) Costs of repairing the factory door, which was damaged by the installation of the new machine(f) Training costs of workers who will use the machine
Question 23 options: 8-9. Disposal of asset. Sellem, Inc. is disposing of office furniture it has had for 2 ½ years. The cost of the furniture was $10,000, and Sellem estimated the salvage to be $2,000. A four-year life was expected. (in all answers round to nearest dollar; do not use "$" or commas in your answer) Calculate the amount of annual depreciation on the asset. Calculate the amount of accumulated depreciation on the asset at the time of disposal. Calculate the book value of the asset at the time of disposal.
Question 6 (b) Tingtong bought the following assets during the year 2017 for his retailbusiness. The Inland Revenue has sent notice to him that he is beingaudited for the years of assessment 2018 to 2022. A van costing RM30,000 Air conditioner costing RM3,000  Table and chairs costing RM2,000 Computer costing RM4,000 Required:Prepare the capital allowance and residual expenditure schedules for the aboveassets for the years of assessment 2018 to 2021. Explain and elaborate the answer according to the question. Thank you.
chapter 9 q 4 A building with a cost of $270,000 has an estimated residual value of $54,000, has an estimated useful life of 27 years, and is depreciated by the straight-line method. a. What is the amount of the annual depreciation? Do not round intermediate calculations. b. What is the book value at the end of the fifteenth year of use? c. If at the start of the sixteenth year it is estimated that the remaining life is 15 years and that the residual value is $15,000, what is the depreciation expense for each of the remaining 15 years?
Chapter 10 Problem Set A Problem 10-1 On January 1, 2019 Crampton Company acquired land on which to construct a new distribution warehouse. During 2019, the company made expenditures as follows: Contract price of the land $600,000 Closing costs $23,000 Hoerr Excavating for clearing and grading $65,000 Sparks Concrete Construction for sidewalk and parking lot $158,500 Touchstone Lighting for parking lot lighting $21,500 J Hacker and Associates, Architects $71,000 Town of Normal for building permits $9,500 Lewis General Contractors $4,100,000 Crampton also purchased $1,450,000 of warehousing equipment and conveyors. The entire facility was placed in service before December 31, 2019. Prepare Crampton Company’s PPE section of their balance sheet dated December 31, 2019 before the adjusting entries for depreciation
Exercise 14-35 (LO. 10) An apartment building was acquired in 2011. The depreciation taken on the building was $123,000, and the building was sold for a $34,000 gain. What is the maximum amount of 25% gain?
QS 10-15 (Algo) Intangible assets and amortization LO P4 On January 1 of this year, Diaz Boutique pays $185,000 to modernize its store. Improvements include new floors, ceilings, wiring, and wall coverings. These improvements are estimated to yield benefits for 10 years. Diaz leases (does not own) its store and has 8 years remaining on the lease. 1. & 2. Prepare the journal entry to record the cost of modernization and amortization at the end of this current year.
Question 9. A contractor has a contract to remove and replace the existing landscape and sidewalks around an office building. The work includes demolition of the existing landscaping and sidewallks, importing fill and grading around the office building, constructing new concrete sidewalks, and new landscaping. The contractor uses the cost codes in Figure 2-6. The contractor will perform all of the work except placing the site concrete and the landscaping. The original estimate for the demolition was $30,000, and a $5,000 change order has been approved to remove some unexpected debris found during the demolition. The demolition work has been completed at a cost of $33,562. The original estimate for the fill and grading was $17,500 and a $2,000 change order for importing additional fill to replace the debris has been approved. The fill and grading costs to date are $17,264, and the estimated cost to complete has been estimated at $2,236. The original budget for the labor to pour the…
Problem 7-51 (LO 7-5) Kwan acquired a warehouse for business purposes on August 30, 2002. The building cost $420,000. Kwan took $227,600 of depreciation on the building, and then sold it for $500,000 on July 1, 2021. Required: What is the adjusted basis for the warehouse? What amount of the gain or loss is realized on the sale of the warehouse? What amount of the gain or loss is unrecaptured? At what rate is the unrecaptured gain or loss taxed? What amount of the gain or loss qualifies as a § 1231 gain or loss?
MODULE 5 PARRISH 8-4 USE OF ASSET Please take a look at the question below and give the correct answer and please explain the transaction and how it would be recorded. Thank you! Wee Small Company has an asset that was just purchased. THe cost of hte asset was $72,000. The company has determined that the salvage value is $2,000, and the life of the asset is five years. Depreciation is straight-one. 1) Journalize the entry to record depreciation for the first year of the asset's life. 2) Journalize the entry to record depreciation for the first month of the asset's life