ng Objective 1S10-1 Determining the cost of an assetHighland Clothing purchased land, paying $96,000 cash and signing a $300,000 notepayable. In addition, Highland paid delinquent property tax of $1,100, title insurancecosting $600, and $4,600 to level the land and remove an unwanted building. Recordthe journal entry for purchase of the land.

Cost of a fixed asset include all costs incurred to bring the asset into present location and…

Answered: journal entry for purchase of the land.

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journal entry for purchase of the land.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter2: Asset And Liability Valuation And Income Recognition

Section: Chapter Questions

Problem 11PC: Costs to Be Included in Historical Cost Valuation. At a cost of 200,000, Assume In-N-Out Burger...

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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. Finder's fee paid to real estate agency.......................................... 23,400 D. Delinquent real estate taxes on property, assumed by purchaser................. 15,000 E. Architect's and engineer's 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 1. 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 L. 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 0. 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 (1) 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 income statement and balance sheet if the cost of paving the parking lot of 21,600 [payment (0)] was incorrectly classified as Land rather than Land Improvements? Assume Land Improvements are depreciated over a 10-year life using the double-declining-balance method.
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.
Cost of a Fixed Asset Colson Photography Service purchased a new digital imaging machine on April 15 for $11,200. During installation Colson incurred and paid in cash the following costs: Colson also paid $160 to replace a bracket on the digital imager that was damaged when one of Colsons employees dropped a box on it while it was being installed. Required: 1. Determine the cost of the digital imaging machine. 2. CONCEPTUAL CONNECTION Explain why you included or excluded the $160 bracket replacement cost.
Use the information in Problem A-1 to solve this problem. Assume that the van is five-year property for tax purposes. Required Prepare a schedule of depreciation under MACRS. Round figures to the nearest whole dollar. PROBLEM A-1 A delivery van was bought for 18,000. The estimated life of the van is four years. The trade-in value at the end of four years is estimated to be 2,000. Check Figure Year 3 depreciation, 3,456
Costs to Be Included in Historical Cost Valuation. At a cost of 200,000, Assume In-N-Out Burger acquired a tract of land for a restaurant site. It paid attorneys 7,500 to conduct a title search and to prepare the required legal documents for the purchase. State real estate transfer taxes totaled 2,500. Building permits totaled 1,200. Compute the acquisition cost of the land.
Ngo Company purchased a truck for $54,000. Sales tax amounted to $5,400; shipping costs amounted to $1,200; and one-year registration of the truck was $100. What is the total amount of costs that should be capitalized? A. $60,600 B. $66,100 C. $54,000 D. $59,400
Cost of a Fixed Asset Metropolis Country Club purchased a new tractor to be used for golf course maintenance. The tractor cost $64,200. Metropolis borrowed the purchase price from its bank on a 1-year, 7% note payable. Metropolis incurred the following costs: Required: 1. Compute the cost of the tractor. 2. CONCEPTUAL CONNECTION Explain why any costs were excluded from the cost of the tractor.
Disposal of an Operating Asset Jolie Company owns equipment with a cost of $85,500 and accumulated depreciation of 76,200. Required: Prepare the journal entry to record the disposal of the equipment on April 9 assuming: 1. Jolie sold the equipment for $11,200 cash. 2. Jolie sold the equipment for $7,900 cash.
Determining the cost of an asset Highland Clothing purchased land, paying $96,000 cash and signing a $300,000 note payable. In addition, Highland paid delinquent property tax of $1,100, title insurance costing $600, and $4,600 to level the land and remove an unwanted building. Record the journal entry for the purchase of the land.
Question: Alton Clothing purchased land, paying $88,000 cash plus a $250,000 note payable. In addition, Alton paid delinquent property tax of $1,900, title insurance costing $500, and $4,200 to level the land and remove an unwanted building. Record the journal entry for the purchase of the land.
Exercise 9-03 a On March 1, 2022, Sandhill Co. acquired real estate, on which it planned to construct a small office building, by paying $85,000 in cash. An old warehouse on the property was demolished at a cost of $9,200; the salvaged materials were sold for $1,900. Additional expenditures before construction began included $1,400 attorney’s fee for work concerning the land purchase, $5,000 real estate broker’s fee, $8,900 architect’s fee, and $15,000 to put in driveways and a parking lot.(a) Determine the amount to be reported as the cost of the land. Cost of land $Enter a dollar amount
Determining the cost of assets Lawson Furniture purchased land, paying $65,000 cash and signing a $250,000 note payable. In addition, Lawson paid delinquent property tax of $5,000, title insurance costing $4,000, and $9,000 to level the land and remove an unwanted building. The company then constructed an office building at a cost of $400,000. It also paid $54,000 for a fence around the property, $12,000 for a sign near the entrance, and $8,000 for a special lighting of the grounds. Requirements Determine the cost of the land, land improvements, and building. Which of these assets will Lawson depreciate?