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Problem 26-11 (IAA) Paragon Company incurred the following costs during the eurrent year in relation to property, plant and equipment: Cash paid for purchase of land Mortgage assumed on the land purchased, including 2,500,000' interest accrued Realtor commission 1,000,000 300,000 50,000 Legal fees, realty taxes and documentation expenses Amount paid to relocate persons squatting on the property 100,000 Cost of tearing down an old building on the land to make room for construction of new building Salvage value of the old building demolished Cost of fencing the property after completion Amount paid to the contractor for the building constructed 5,000,000 Building permit fee Еxcacation Architect fée Interest that would have been earned had the money used during the period of construction been invested Invoice cost of machine acquired Freight, unloading and delivery charges Custom dutiés and other charges Allowances and hotel accommodation, paid to foreign technicians during installation and test run of machine 400,000 200,000 50,000 110,000 50,000 50,000 200,000 150,000 2,000,000 60,000 140,000 1. What amount should be capitalized as cost of land? a. 3,950,000 b. 4,100,000 c. 3,850,000 d. 3,800,000 2. What amount should be capitalized as cost of building? а. 5,300,000 b. 5,410,000 c. 5,450,000 d. 5,560,000 3. What amount should be capitalized as cost of machine? a. 2,600,000 b. 2,000,000 c. 2,200,000 d. 2,560,000

Problem 26-11 (IAA) Paragon Company incurred the following costs during the eurrent year in relation to property, plant and equipment: Cash paid for purchase of land Mortgage assumed on the land purchased, including 2,500,000' interest accrued Realtor commission 1,000,000 300,000 50,000 Legal fees, realty taxes and documentation expenses Amount paid to relocate persons squatting on the property 100,000 Cost of tearing down an old building on the land to make room for construction of new building Salvage value of the old building demolished Cost of fencing the property after completion Amount paid to the contractor for the building constructed 5,000,000 Building permit fee Еxcacation Architect fée Interest that would have been earned had the money used during the period of construction been invested Invoice cost of machine acquired Freight, unloading and delivery charges Custom dutiés and other charges Allowances and hotel accommodation, paid to foreign technicians during installation and test run of machine 400,000 200,000 50,000 110,000 50,000 50,000 200,000 150,000 2,000,000 60,000 140,000 1. What amount should be capitalized as cost of land? a. 3,950,000 b. 4,100,000 c. 3,850,000 d. 3,800,000 2. What amount should be capitalized as cost of building? а. 5,300,000 b. 5,410,000 c. 5,450,000 d. 5,560,000 3. What amount should be capitalized as cost of machine? a. 2,600,000 b. 2,000,000 c. 2,200,000 d. 2,560,000

Financial & Managerial Accounting
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter9: Fixed Assets And Intangible Assets
Section: Chapter Questions
Problem 9.1APR
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Problem 26-11 (IAA) Paragon Company incurred the following costs during the eurrent year in relation to property, plant and equipmenț: 2,500,000 ' Cash paid for purchase of land Mortgage assumed on the land purchased, including interest accrued Realtor commission 1,000,000 300,000 50,000 Legal fees, realty taxes and documentation expenses Amount paid to relocate persons squatting on the property 100,000 Cost of tearing down an old building on the land to make room for construction of new building Salvage value of the old building demolished Cost of fencing the property after completion Amount paid to the contractor for the building constructed 5,000,000 Building permit fee Еxcacation Architect fée Interest that would have been earned had the money used during the period of construction been invested Invoice cost of machine acquired Freight, unloading and delivery charges Custom dutiés and other charges Allowances and hotel accommodation, paid to foreign technicians during installation and test run of machine 400,000 200,000 50,000 110,000 50,000 50,000 200,000 150,000 2,000,000 60,000 140,000 1. What amount should be capitalized as cost of land? а. 3,950,000 b. 4,100,000 c. 3,850,000 d. 3,800,000 2. What amount should be capitalized as cost of building? a. 5,300,000 b. 5,410,000 с. 5,450,000 d. 5,560,000 3. What amount should be capitalized as cost of machine? a. 2,600,000 b. 2,000,000 с. 2,200,000 d. 2,560,000 CS Scanned with CamScanner
Transcribed Image Text:Problem 26-11 (IAA) Paragon Company incurred the following costs during the eurrent year in relation to property, plant and equipmenț: 2,500,000 ' Cash paid for purchase of land Mortgage assumed on the land purchased, including interest accrued Realtor commission 1,000,000 300,000 50,000 Legal fees, realty taxes and documentation expenses Amount paid to relocate persons squatting on the property 100,000 Cost of tearing down an old building on the land to make room for construction of new building Salvage value of the old building demolished Cost of fencing the property after completion Amount paid to the contractor for the building constructed 5,000,000 Building permit fee Еxcacation Architect fée Interest that would have been earned had the money used during the period of construction been invested Invoice cost of machine acquired Freight, unloading and delivery charges Custom dutiés and other charges Allowances and hotel accommodation, paid to foreign technicians during installation and test run of machine 400,000 200,000 50,000 110,000 50,000 50,000 200,000 150,000 2,000,000 60,000 140,000 1. What amount should be capitalized as cost of land? а. 3,950,000 b. 4,100,000 c. 3,850,000 d. 3,800,000 2. What amount should be capitalized as cost of building? a. 5,300,000 b. 5,410,000 с. 5,450,000 d. 5,560,000 3. What amount should be capitalized as cost of machine? a. 2,600,000 b. 2,000,000 с. 2,200,000 d. 2,560,000 CS Scanned with CamScanner
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