Homework Help is Here – Start Your Trial Now!
Business
Accounting
On January 1, 2020, Williamsburg Inc. acquired a piece of land to construct a manufacturing plant. You have the following information about this transaction:

On January 1, 2020, Williamsburg Inc. acquired a piece of land to construct a manufacturing plant. You have the following information about this transaction:

SWFT Essntl Tax Individ/Bus Entities 2020
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter17: Business Tax Credits And The Alternative Minimum Tax
Section: Chapter Questions
Problem 11P
See similar textbooks
icon
Related questions
Question
On January 1, 2020, Williamsburg Inc. acquired a piece of land to construct a manufacturing plant. You have the following information about this transaction: $240,000 4% of price $5,000 Price of land Tax on transfer of land Legal free to transfer property of land to Williamsburg $6,000 $1,000 $860,000 $2,100 $6,400 Cost of demolishing old building on the land Income from scrap that was sold of old building Cost of manufacturing building construction Cost of insurance during construction Cost of annual insurance on manufacturing building after the construction is finished Cost to repair a piece of equipment used in the $1,000 factories construction Management decided to allocate the following amounts to the parts of the factory building, and estimated the corresponding useful lives and residual values as follows: Allocated cost Useful life Residual value Allocated Cost Useful Life Residual Value $20,000 $1,000 $0 $4,000 $10,000 Windows 10 years $20,000 $100,000 Furnace 10 years Equipment 12 years Building Rest of manufacturing 40 years plant total cost The building was ready for use on September 1, 2020, but Williamsburg Inc. started using it on October 31st, 2020. Williamsburg Inc. applies IFRS. Required A) Calculate the total cost of land and of the office building and prepare the appropriate journal entry assuming everything was paid for in cash. B) Calculate the total depreciation expense to be recorded on December 31, 2020 assuming the straight- line method is used for all assets.
Transcribed Image Text:On January 1, 2020, Williamsburg Inc. acquired a piece of land to construct a manufacturing plant. You have the following information about this transaction: $240,000 4% of price $5,000 Price of land Tax on transfer of land Legal free to transfer property of land to Williamsburg $6,000 $1,000 $860,000 $2,100 $6,400 Cost of demolishing old building on the land Income from scrap that was sold of old building Cost of manufacturing building construction Cost of insurance during construction Cost of annual insurance on manufacturing building after the construction is finished Cost to repair a piece of equipment used in the $1,000 factories construction Management decided to allocate the following amounts to the parts of the factory building, and estimated the corresponding useful lives and residual values as follows: Allocated cost Useful life Residual value Allocated Cost Useful Life Residual Value $20,000 $1,000 $0 $4,000 $10,000 Windows 10 years $20,000 $100,000 Furnace 10 years Equipment 12 years Building Rest of manufacturing 40 years plant total cost The building was ready for use on September 1, 2020, but Williamsburg Inc. started using it on October 31st, 2020. Williamsburg Inc. applies IFRS. Required A) Calculate the total cost of land and of the office building and prepare the appropriate journal entry assuming everything was paid for in cash. B) Calculate the total depreciation expense to be recorded on December 31, 2020 assuming the straight- line method is used for all assets.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Property, Plant and Equipment
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
SWFT Essntl Tax Individ/Bus Entities 2020
SWFT Essntl Tax Individ/Bus Entities 2020
Accounting
ISBN:
9780357391266
Author:
Nellen
Publisher:
Cengage
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
SWFT Individual Income Taxes
SWFT Individual Income Taxes
Accounting
ISBN:
9780357391365
Author:
YOUNG
Publisher:
Cengage
SWFT Comprehensive Vol 2020
SWFT Comprehensive Vol 2020
Accounting
ISBN:
9780357391723
Author:
Maloney
Publisher:
Cengage
SEE MORE TEXTBOOKS