Noon Co. acquired land and building for 10,000,000. Noon Co. also made the following expedintures. Land Titling cost 100,000 Special assesment 40,000 Payments to tenants to vacate premises 80,000 Options taken out on several pieces of property 300,000 Building remodeling prior to occupancy 800,000 Repairs and maintenance after occupancy 20,000 Landscaping on the premises (karesansui or Japanese garden, ornamental plants and backyard pond) 24000 Addition of driveway and parking lot on the premises 80,000 The fair value of the building is thrice as musch as the land. Of the options taken, 120,000 relate to the land and building acquired; the balance relates to properties not acquired. Requirement: Compute for the costs of land, land improvement and building.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Noon Co. acquired land and building for 10,000,000. Noon Co. also made the following expedintures.
Land Titling cost 100,000
Special assesment 40,000
Payments to tenants to vacate premises 80,000
Options taken out on several pieces of property 300,000
Building remodeling prior to occupancy 800,000
Repairs and maintenance after occupancy 20,000
Landscaping on the premises (karesansui or Japanese garden, ornamental plants and backyard pond) 24000
Addition of driveway and parking lot on the premises 80,000
The fair value of the building is thrice as musch as the land. Of the options taken, 120,000 relate to the land and building acquired; the balance relates to properties not acquired.
Requirement: Compute for the costs of land, land improvement and building.
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