# During the current year, Alanna Co. had the following transactions pertaining to its new office building. A. What should Alanna Co. record on its books for the land? The total cost of land includes all costs of preparing the land for use. The demolition cost of the old building is added to the land costs, and the sale of the old building scrap is subtracted from the land cost. B. What should Alanna Co. record on its books for the building?

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

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Section
FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 11, Problem 3PB
Textbook Problem
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## During the current year, Alanna Co. had the following transactions pertaining to its new office building.A. What should Alanna Co. record on its books for the land? The total cost of land includes all costs of preparing the land for use. The demolition cost of the old building is added to the land costs, and the sale of the old building scrap is subtracted from the land cost.B. What should Alanna Co. record on its books for the building?

To determine

(a)

Introduction:

Cost of acquisition refers to all the costs incurred to acquire an asset, and all the costs incurred to put that asset in operations. It may include taxes, shipping costs, installtaions costs, legal charges, etc.

To compute:

Amount to be recorded as land in the books of Company A.

### Explanation of Solution

Calculation of amount to be recorded as land by company A:

 Particulars Amount (\$) Purchase price of land 240,000 Add: Legal fees paid to purchase land 6,000 Destruction of old building on site 15,000 Less: Scrap s...
To determine

(b)

Introduction:

When the cost is incurred to increase the value and the life of an asset, then it needs to be capitalized in the books of accounts and shown in the balance sheet and is depreciated over the years.

To compute:

Amount to be recorded as building in the books of Company A.

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