Accounting
Accounting
27th Edition
ISBN: 9781337272094
Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher: Cengage Learning,
bartleby

Concept explainers

bartleby

Videos

Textbook Question
Chapter 10, Problem 10.1BPR

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
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 year’s 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.

Blurred answer
Students have asked these similar questions
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 ceramic business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search $3,000   b. Cost of real estate acquired as a plant site: Land 290,000                                                                      Building (to be demolished) 60,000   c. Delinquent real estate taxes on property, assumed by purchaser 16,000   d. Cost of razing and removing building acquired in (b) 4,000   e. Proceeds from sale of salvage materials from old building 4,000 *   f. Special assessment paid to city for extension of water main to the property 28,000   g. Architect’s and engineer’s fees for plans and supervision 70,000   h. Premium on one-year insurance policy during construction 5,000   i. Cost of filling and grading land 13,000   j. Money borrowed to pay building…
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 ceramic business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search $2,000   b. Cost of real estate acquired as a plant site: Land 280,000                                                                      Building (to be demolished) 55,000   c. Delinquent real estate taxes on property, assumed by purchaser 15,000   d. Cost of razing and removing building acquired in (b) 5,000   e. Proceeds from sale of salvage materials from old building 3,000 *   f. Special assessment paid to city for extension of water main to the property 29,000   g. Architect’s and engineer’s fees for plans and supervision 60,000   h. Premium on one-year insurance policy during construction 7,000   i. Cost of filling and grading land 13,000   j. Money borrowed to pay building…
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 ceramic business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search $3,000   b. Cost of real estate acquired as a plant site: Land 280,000                                                                      Building (to be demolished) 55,000   c. Delinquent real estate taxes on property, assumed by purchaser 16,000   d. Cost of razing and removing building acquired in (b) 5,000   e. Proceeds from sale of salvage materials from old building 5,000 *   f. Special assessment paid to city for extension of water main to the property 28,000   g. Architect’s and engineer’s fees for plans and supervision 70,000   h. Premium on one-year insurance policy during construction 7,000   i. Cost of filling and grading land 11,000   j. Money borrowed to pay building…

Chapter 10 Solutions

Accounting

Ch. 10 - Straight-line depreciation A building acquired at...Ch. 10 - Straight-line depreciation Equipment acquired at...Ch. 10 - Units-of-activity depreciation A truck acquired at...Ch. 10 - Units-of-activity depreciation A tractor acquired...Ch. 10 - Double declining-balance depreciation A building...Ch. 10 - Double-declining-balance depreciation Equipment...Ch. 10 - Revision of depreciation Equipment with a cost of...Ch. 10 - Revision of depreciation A truck with a cost of...Ch. 10 - Capital and revenue expenditures On February 14,...Ch. 10 - Capital and revenue expenditures On August 7,...Ch. 10 - Sale of equipment Equipment was acquired at the...Ch. 10 - Sale of equipment Equipment was acquired at the...Ch. 10 - Prob. 10.7APECh. 10 - Prob. 10.7BPECh. 10 - Prob. 10.8APECh. 10 - Prob. 10.8BPECh. 10 - Fixed asset turnover ratio Financial statement...Ch. 10 - Fixed asset turnover ratio Financial statement...Ch. 10 - Costs of acquiring fixed assets Melinda Stoffers...Ch. 10 - Prob. 10.2EXCh. 10 - Prob. 10.3EXCh. 10 - Nature of depreciation Tri-City Ironworks Co....Ch. 10 - Straight-line depreciation rates Convert each of...Ch. 10 - Straight-line depreciation A refrigerator used by...Ch. 10 - Depreciation by units-of-activity method A...Ch. 10 - Depreciation by units-of-activity method Prior to...Ch. 10 - Depreciation by two methods A Kubota tractor...Ch. 10 - Depreciation by two methods A storage tank...Ch. 10 - Partial-year depreciation Equipment acquired at a...Ch. 10 - Revision of depreciation A building with a cost of...Ch. 10 - Capital and revenue expenditures US Freight Lines...Ch. 10 - Prob. 10.14EXCh. 10 - Capital and revenue expenditures Quality Move...Ch. 10 - Capital expenditure and depreciation; parital-year...Ch. 10 - Entries for sale of fixed asset Equipment acquired...Ch. 10 - Disposal of fixed asset Equipment acquired on...Ch. 10 - Prob. 10.19EXCh. 10 - Amortization entries Kleen Company acquired patent...Ch. 10 - Book value of fixed assets Apple Inc. designs,...Ch. 10 - Balance sheet presentation List the errors you...Ch. 10 - Fixed asset turnover ratio Amazon.com, Inc. is the...Ch. 10 - Fixed asset turnover ratio Verizon Communications...Ch. 10 - Fixed asset turnover ratio FedEx Corporation and...Ch. 10 - Fixed asset turnover ratio The following table...Ch. 10 - Asset traded for similar asset A printing press...Ch. 10 - Prob. 10.28EXCh. 10 - Entries for trade of fixed asset On July 1, Twin...Ch. 10 - Entries for trade of fixed asset On October 1,...Ch. 10 - Allocating payments and receipts to fixed asset...Ch. 10 - Comparing three depreciation methods Dexter...Ch. 10 - Depreciation by three methods; partial years...Ch. 10 - Depreciation by two methods; sale of fixed asset...Ch. 10 - Transactions for fixed assets, including sale The...Ch. 10 - Amortization and depletion entries Data related to...Ch. 10 - Allocating payments and receipts to fixed asset...Ch. 10 - Comparing three depreciation methods Waylander...Ch. 10 - Depreciation by three methods; partial years...Ch. 10 - Depreciation by two methods; sale of fixed asset...Ch. 10 - Transactions for fixed assets, including sale The...Ch. 10 - Amortization and depletion entries Data related to...Ch. 10 - Ethics in Action Hard Bodies Co. is a fitness...Ch. 10 - Prob. 10.2CPCh. 10 - Communication Godwin Co. owns three delivery...Ch. 10 - Prob. 10.6CP
Knowledge Booster
Accounting
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
  • Allocate 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. Instructions Determine the increases to Land, Lind Improvements. and Building.
    Inclusion in Property, Plant, and Equipment Guthrie Inc. must determine whether the following items are included in property, plant, and equipment: a. idle equipment awaiting sale b. machinery kept on hand and used only when other machinery breaks c. land held for investment d. the right to publish a literary work e. progress payments on a building being constructed by a contractor f. fully depredated assets still being used g. expenditures to improve leased property h. equipment leased to others i. purchase of an asset with an expected life of 9 months j. obligation to remove leasehold improvement at the termination of a lease Required: 1. Indicate which items are included in the cost of property, plant, and equipment and which items are excluded from the cost of property, plant, and equipment. 2. Next Level For each item excluded from property, plant, and equipment, explain why it was excluded.
    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.
  • Expenditures After Acquisition Listed below are several transactions: a. Paid $80 cash to replace a minor part of an air conditioning system. b. Paid $40,000 to fix structural damage to a building. c. Paid $8,000 for monthly salaries. d. Paid $12,000 to replace a manual cutting machine with a computer-controlled machine. e. Paid $1,000 related to the annual painting of a building. Required: Classify each transaction as either a revenue expenditure, a capital expenditure, or neither.
    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 ceramic business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search 2,500 b. Cost of real estate acquired as a plant site: Land 285,000 Building (to be demolished) 55,000 c. Delinquent real estate taxes on property, assumed by purchaser 15,500 d. Cost of tearing down and removing building acquired In (b) 5,000 e. Proceeds from sale of salvage materials from old building 4,000 f. Special assessment paid to city for extension of water main to the property 29,000 g. Architects and engineers fees for plans and supervision 60,000 h. Premium on one-year insurance policy during construction 6,000 i. Cost of filling and grading land 12,000 j. Money borrowed to pay building contractor 900,000 k. Cost of repairing windstorm damage during construction 5,500 1. Cost of paving parking lot to be used by customers 32,000 m. Cost of trees and shrubbery planted 11,000 n. Cost of floodlights installed on parking lot 2,000 o. Cost of repairing vandalism damage during construction 2,500 p. Proceeds from insurance company for windstorm and vandalism damage 7,500 q. Payment to building contractor for new building 800,000 r. Interest incurred on building loan during construction 34,500 s. Refund of premium on insurance policy (h) canceled after 11 months 500 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 of filling and grading land of 12,000 [payment (i)] was incorrectly classified as Land Improvements rather than Land? Assume that Land Improvements are depreciated over a 20-year life using the double-declining-balance method.
    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.
    Recommended textbooks for you
  • Survey of Accounting (Accounting I)
    Accounting
    ISBN:9781305961883
    Author:Carl Warren
    Publisher:Cengage Learning
    Accounting
    Accounting
    ISBN:9781337272094
    Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
    Publisher:Cengage Learning,
    Financial & Managerial Accounting
    Accounting
    ISBN:9781285866307
    Author:Carl Warren, James M. Reeve, Jonathan Duchac
    Publisher:Cengage Learning
  • Financial Accounting Intro Concepts Meth/Uses
    Finance
    ISBN:9781285595047
    Author:Weil
    Publisher:Cengage
    Cornerstones of Financial Accounting
    Accounting
    ISBN:9781337690881
    Author:Jay Rich, Jeff Jones
    Publisher:Cengage Learning
    Century 21 Accounting General Journal
    Accounting
    ISBN:9781337680059
    Author:Gilbertson
    Publisher:Cengage
  • Survey of Accounting (Accounting I)
    Accounting
    ISBN:9781305961883
    Author:Carl Warren
    Publisher:Cengage Learning
    Accounting
    Accounting
    ISBN:9781337272094
    Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
    Publisher:Cengage Learning,
    Financial & Managerial Accounting
    Accounting
    ISBN:9781285866307
    Author:Carl Warren, James M. Reeve, Jonathan Duchac
    Publisher:Cengage Learning
    Financial Accounting Intro Concepts Meth/Uses
    Finance
    ISBN:9781285595047
    Author:Weil
    Publisher:Cengage
    Cornerstones of Financial Accounting
    Accounting
    ISBN:9781337690881
    Author:Jay Rich, Jeff Jones
    Publisher:Cengage Learning
    Century 21 Accounting General Journal
    Accounting
    ISBN:9781337680059
    Author:Gilbertson
    Publisher:Cengage
    What is a mortgage; Author: Kris Krohn;https://www.youtube.com/watch?v=CFjY-58ooi0;License: Standard YouTube License, CC-BY
    Topic 10 Accounting for Liabilities Mortgage Payable; Author: Accounting Thinker;https://www.youtube.com/watch?v=EPJOphrbArM;License: Standard YouTube License, CC-BY