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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Arlette’s Pet Shop purchases a building. The purchase price per the contract is $250,000. The cost of building permits is $3,500. Conversion costs to kennel and pet care facilities total $125,000. What amount should be recorded by Arlette’s as the cost of the building?

To determine

Identify the amount that must be recorded as the cost of the building.

Explanation

Determination of cost:

The procurement or acquisition cost of “property, plant and equipment comprises” of all costs that are required to obtain the benefits to be derived from the asset.

Calculate the cost of building:

CostofBuilding=(Purchasevalueofbuilding+Cost

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