Ivanhoe Co. purchased land as a factory site for $520,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months. The company paid $54,600 to raze the old buildings and sold salvaged lumber and brick for $8,190. Legal fees of $2.405 were paid for title investigation and drawing the purchase contract. Ivanhoe paid $2,860 to an engineering firm for a land survey, and $88,400 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $1,950, and a liability insurance premium paid during construction was $1,170. The contractor's charge for construction was $3,562,000. The company paid the contractor in two installments: $1,560,000 at the end of 3 months and $2,002,000 upon completion. Interest costs of $221,000 were incurred to finance the construction. Determine the cost of the land and the cost of the building as they should be recorded on the books of Ivanhoe Co. Assume that the land survey was for the building. Cost of the Land $4 Cost of the Building $4

Question
Ivanhoe Co. purchased land as a factory site for $520,000. The process of tearing down two old buildings on the site and
constructing the factory required 6 months.
The company paid $54,600 to raze the old buildings and sold salvaged lumber and brick for $8,190. Legal fees of $2.405 were paid
for title investigation and drawing the purchase contract. Ivanhoe paid $2,860 to an engineering firm for a land survey, and
$88,400 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the
property cost $1,950, and a liability insurance premium paid during construction was $1,170. The contractor's charge for
construction was $3,562,000. The company paid the contractor in two installments: $1,560,000 at the end of 3 months and
$2,002,000 upon completion. Interest costs of $221,000 were incurred to finance the construction.
Determine the cost of the land and the cost of the building as they should be recorded on the books of Ivanhoe Co. Assume that the
land survey was for the building.
Cost of the Land
$4
Cost of the Building
$4
Expand
Transcribed Image Text

Ivanhoe Co. purchased land as a factory site for $520,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months. The company paid $54,600 to raze the old buildings and sold salvaged lumber and brick for $8,190. Legal fees of $2.405 were paid for title investigation and drawing the purchase contract. Ivanhoe paid $2,860 to an engineering firm for a land survey, and $88,400 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $1,950, and a liability insurance premium paid during construction was $1,170. The contractor's charge for construction was $3,562,000. The company paid the contractor in two installments: $1,560,000 at the end of 3 months and $2,002,000 upon completion. Interest costs of $221,000 were incurred to finance the construction. Determine the cost of the land and the cost of the building as they should be recorded on the books of Ivanhoe Co. Assume that the land survey was for the building. Cost of the Land $4 Cost of the Building $4

Expert Answer

1 Rating

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Accounting Principles

Accounting theory

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Suppose you take a 10-year mortgage for a house that costs $252,923. Assume the following: The annu...

A: mortgage amount =252923 Down payment =10% Down payment =25292.30 mortgage amount =252923-25292.30 mo...

Q: Requirement 4. No preferred dividends are in arrears . Journalize the declaration of a $ 700,000 div...

A: Dividend distribution is a method of distributing profit among the stockholder of the organization. ...

Q: SELLING PRICE  PER UNIT 200     OPERATING INCOME      42,000     IN 2018     Variable expenses per u...

A: Operating income =Total sales-Variable cost-Fixed cost  Variable Cost =Direct material +Direct labou...

Q: On March 1, a company received P3,000 cash from a client as an advance for 12 months’ worth of deliv...

A: Adjusting journal entry: To record any unrecognized income or expenses for the period company made a...

Q: Performing services for cash will have the following effects on the components of the basic accounti...

A: The accounting equation refers to the equation of the balance sheet. It is based on the method of to...

Q: An entity’s unadjusted trial balance does not equal. The following information was determined: • The...

A: Trial balance is prepared to find out the arthimetical accuracy of books of account with all ledger ...

Q: The following is extracted from the books of White Co as at 31 December 2019: Net current assets 6 0...

A: Formula: Capital = Assets - Liabilities. Deduction of liabilities from Assets derives the capital.

Q: Assuming the following Adjusted Trial Balance: Adjusted Trial Balance Debit Credit Cash $17,900 Acco...

A: Introduction Post-closing trial balance: Post-closing trial balance is the trial balance prepared at...

Q: Synergy Inc. produces plastic grocery bags. Synergy has developed a static budget for the month of J...

A: Flexible budgets: Flexible budgets are prepared for various levels of activities or outputs. This en...

Q: The 2014 comparative balance sheet and 2014 income statement of Byfield Co Ltd, have just been distr...

A: Click to see the answer

Q: Prepare the journal entries to record the following purchase transactions in Blossom Company’s books...

A: Discount on Payment = (Purchases - Purchase return) x discount rate = ($23000- $2700) x 2% = $406

Q: Requirement 2. Prepare the stockholders ' equity section of the KCAS - TV balance sheet at September...

A: Click to see the answer

Q: The 2014 comparative balance sheet and 2014 income statement of Byfield Co Ltd, have just been distr...

A: As posted multiple independent questions we are answering only first question kindly repost the unan...

Q: Before any year-end adjustments were made, the profit of Pedro Co. was P2,000,000. However, the foll...

A: Adjusting journal entry: To record any unrecognized income or expenses for the period company made a...

Q: The 2014 comparative balance sheet and 2014 income statement of Byfield Co Ltd, have just been distr...

A: Cash flow statement: It is a statement which reports the cash inflows and outflows of a business dur...

Q: Appliances Inc. is preparing an aggregate production plan for washers for the next four months. The ...

A: Production plan: Production plan involves planning related to proper allocation of employees, resour...

Q: Gainer Company has three sources of financing: $3 million of mortgage bonds paying 5 percent interes...

A: Mortgage bonds value=3000000 cost of bond=5% after tax=r1=5(1-0.4)=3% weighted cost=w1=3000000/(3000...

Q: Darius Manufacturing Company manufactures and sells parts for various musical gadgets. The businesse...

A: (a) Calculation of number of units sold in 2018 is as follows:

Q: Below is a savings plan for Adrienne. Use this table to answer the questions below.# of Months Savin...

A: Click to see the answer

Q: 3.A business operated at 100% of capacity during its first month, with the following results: Sal...

A: Answer 3 We’ll answer the first question since the exact one wasn’t specified. Please submit a new q...

Q: 4. An equipment costs P8,000.00 has an economic life of 8 years and a salvage value of P400.00 at th...

A: Definition: Depreciation: Depreciation is a method of reducing the capitalized cost of long-lived op...

Q: The following was taken from Stickers Corp.’s accounting records for the year ended December 31, 201...

A: Raw material used = Raw material purchased - Increase in raw material inventory

Q: Below is budgeted production and sales information for Bluebird Company for the month of December. ...

A: The budget is prepared by the management on the basis of past experience. It is helpful in figuring ...

Q: can these two questions be worked out please

A: Because of the time constraint only first question is solved here. Resubmit and mention the question...

Q: Wallace Inc. collects 90% of its sales on account in the month of the sale and 10% in the month foll...

A: Cash collection from September sales = September sales on credit x 10% = $276,000 x 10% = $27,600

Q: please help me with this =( On May 12, Wilcox Company accepted delivery of $20,000 of merchandise an...

A: Following are the Journal entries recorded

Q: eBook Show Me How Print Item Schedule of Cash Collections of Accounts Receivable Bark & Pur...

A: Click to see the answer

Q: On January 1, 2020, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, ...

A: The report data given by Smashing is as follows,

Q: 8. A business operated at 100% of capacity during its first month, with the following results: Sa...

A: Sales   90,000 Less: Variable Cost of Goods sold     Opening Inventory 0   Add: Variable cost ...

Q: Radison Enterprises sells a product for $57 per unit. The variable cost is $26 per unit, while fixed...

A: Break-even analysis is a technique widely used by the production department. It helps to determine t...

Q: When the bond interest rate > the market rate, the bonds are issued at a discount. Select one: O ...

A: Bond issued has fixed percentage of interest rate which is payable by bond issuer to bond holder. Ma...

Q: The following items were selected from among the transactions completed by Sherwood Co. during the c...

A: Journal entries: These are prepared to record the financial and non-financial transactions of the bu...

Q: 12. Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. ass...

A: Absorption costing is a total cost technique, where cost includes variable and fixed expenses. Varia...

Q: PROBLEM 2-24 Income Statement; Schedule of Cost of Goods Manufactured [L01, LO2, LO3, LO4]. Visic Co...

A: Raw materials: It is the basic input required to manufacture the finished products. The raw material...

Q: From the following transactions for BlackJade Company, find the required balances for the month ende...

A: Cash basis accounting: In cash basis accounting , revenue are recognized when payment is received an...

Q: The balances of the ledger accounts of Beldren Home Center as of December 31, the end of its fiscal ...

A: Financial statements:   Financial statements are condensed summary of transactions communicated in t...

Q: Pedroni Fuel Company is a small oil services company owned and operated by Ray Zorzi. On October 31,...

A: Adjusting entries: These entries are passed at the end of a particular accounting or financial year ...

Q: List two factors F. Raser should consider in deciding whether to raise finance by issuing loan notes...

A: Financing decisions are very important for a firm /company. Financing decisions relates to selection...

Q: Statement of Cash Flows—Direct Method Applied to PR 16-1B The comparative balance sheet of Merrick E...

A: Cash Flow Statement:   It is a financial statement prepared by a company to report their cash inflow...

Q: A key ethical issue in cost allocation involves costing in an international context, because the cho...

A: Cost allocation is a process of identifying, assigning, aggregating the costs to various cost object...

Q: United Merchants Company sells 20,000 units at $27 per unit. Variable costs are $16.20 per unit, and...

A: Contribution margin: Difference between the sales and the variable costs is called contribution marg...

Q: Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreeme...

A: Journal entries are the entries to be recorded in the accounting books of the business for all the f...

Q: Solvency and Profitability Trend Analysis Addai Company has provided the following comparative infor...

A: Return on Total Assets: This is the ratio between the earnings before interest and taxes (EBIT) and ...

Q: what accounting method will be used to evaluate each of the responsibility centers?

A: Responsibility accounting: Responsibility accounting refers to the various tool used by managerial a...

Q: Record the journal entry or entries fo sales transactions. Glow Industries se $50 per light to a cus...

A: Journal Entry:   Journal entry has two effects for every transaction. The journal entry is passed by...

Q: Outside of payroll, inventory is a very large expense for firms. Identify and discuss at least three...

A: Inventory:   Inventory for a business refers to stock in hand, work in process, raw materials, finis...