CengageNOWv2, 1 term Printed Access Card for Warren's Survey of Accounting, 8th
8th Edition
ISBN: 9781305961982
Author: Carl Warren
Publisher: Cengage Learning
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Chapter 7, Problem 7.1.1P
To determine
Concept Introduction:
Capital Expenditures are that type of expenses which a company incurs on its tangible or fixed assets in regard to either its purchase or for its repairs or installation. These assets are those which are used for more than one year i.e. which are not held for sale. These expenditures are like purchase of land, building, equipment, repairs or improvement in the building or machinery, etc. These expenses are meant for capitalization in the balance sheet in the respective fixed assets.
To assign:
The expenditure and receipt to the respective accounts of the fixed assets.
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The following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses.
(a)
Money borrowed to pay building contractor (signed a note)
$(294,600
)
(b)
Payment for construction from note proceeds
294,600
(c)
Cost of land fill and clearing
10,250
(d)
Delinquent real estate taxes on property assumed by purchaser
7,170
(e)
Premium on 6-month insurance policy during construction
11,100
(f)
Refund of 1-month insurance premium because construction completed early
(1,850
)
(g)
Architect’s fee on building
26,350
(h)
Cost of real estate purchased as a plant site (land $208,600 and building $51,900)
260,500
(i)
Commission fee paid to real estate agency
9,500
(j)
Installation of fences around property
4,120
(k)
Cost of razing and removing building
10,230
(l)
Proceeds from salvage of…
The following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses.
(a)
Money borrowed to pay building contractor (signed a note)
$(294,600
)
(b)
Payment for construction from note proceeds
294,600
(c)
Cost of land fill and clearing
10,250
(d)
Delinquent real estate taxes on property assumed by purchaser
7,170
(e)
Premium on 6-month insurance policy during construction
11,100
(f)
Refund of 1-month insurance premium because construction completed early
(1,850
)
(g)
Architect’s fee on building
26,350
(h)
Cost of real estate purchased as a plant site (land $208,600 and building $51,900)
260,500
(i)
Commission fee paid to real estate agency
9,500
(j)
Installation of fences around property
4,120
(k)
Cost of razing and removing building
10,230
(l)
Proceeds from salvage of…
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…
Chapter 7 Solutions
CengageNOWv2, 1 term Printed Access Card for Warren's Survey of Accounting, 8th
Ch. 7 - Which of the following expenditures incurred in...Ch. 7 - What is the amount of depreciation, using the...Ch. 7 - An example of an accelerated depreciation method...Ch. 7 - Prob. 4SEQCh. 7 - Prob. 5SEQCh. 7 - Which of the following qualities are...Ch. 7 - Prob. 2CDQCh. 7 - Prob. 3CDQCh. 7 - Prob. 4CDQCh. 7 - Are the amounts at which fixed assets are reported...
Ch. 7 - a. Does the recognition of depreciation in the...Ch. 7 - Backyard Company purchased a machine that has a...Ch. 7 - Is it necessary for a business to use the same...Ch. 7 - Prob. 9CDQCh. 7 - Prob. 10CDQCh. 7 - Prob. 11CDQCh. 7 - Prob. 12CDQCh. 7 - Prob. 13CDQCh. 7 - Prob. 14CDQCh. 7 - Prob. 15CDQCh. 7 - Costs of acquiring fixed assets Summer Wilks owns...Ch. 7 - Determine cost of land Snowy Ridges Ski Co. has...Ch. 7 - Determine cost of land Four Corners Delivery...Ch. 7 - Nature of depreciation Custer Construction Co....Ch. 7 - Straight-line depreciation rates Convert each of...Ch. 7 - Straight-line depreciation A refrigerator used by...Ch. 7 - Depreciation by two methods A Caterpillar tractor...Ch. 7 - Depreciation by two methods Equipment acquired at...Ch. 7 - Partial-year depreciation Sandblasting equipment...Ch. 7 - Capital and revenue expenditures About Time...Ch. 7 - Capital and revenue expenditures Dehra Bundy owns...Ch. 7 - Prob. 7.12ECh. 7 - Sale of asset Equipment acquired on January 9,...Ch. 7 - Disposal of fixed asset Equipment acquired on...Ch. 7 - Recording depletion MacLean Mining Co. acquired...Ch. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Book value of fixed assets Apple. Inc., designs,...Ch. 7 - Balance sheet presentation List the errors you...Ch. 7 - Prob. 7.1.1PCh. 7 - Allocate payments and receipts to fixed asset...Ch. 7 - Prob. 7.1.3PCh. 7 - Compare three depreciation methods Bayside...Ch. 7 - Depreciation by two methods; partial years Knife...Ch. 7 - Depreciation by two methods; sale of fixed asset...Ch. 7 - Depreciation by two methods; sale of fixed asset...Ch. 7 - Depreciation by two methods; sale of fixed asset...Ch. 7 - Amortization and depletion entries Data related to...Ch. 7 - Prob. 7.5.2PCh. 7 - Prob. 7.1MBACh. 7 - Prob. 7.2.1MBACh. 7 - Prob. 7.2.2MBACh. 7 - Prob. 7.3.1MBACh. 7 - Prob. 7.3.2MBACh. 7 - Prob. 7.3.3MBACh. 7 - Prob. 7.3.4MBACh. 7 - Prob. 7.4MBACh. 7 - Prob. 7.5.1MBACh. 7 - Asset turnover United Continental Holdings. Inc.,...Ch. 7 - Prob. 7.6.1MBACh. 7 - Prob. 7.6.2MBACh. 7 - Prob. 7.7.1MBACh. 7 - Prob. 7.7.2MBACh. 7 - Prob. 7.8.1MBACh. 7 - Prob. 7.8.2MBACh. 7 - Prob. 7.9.1MBACh. 7 - Prob. 7.9.2MBACh. 7 - Prob. 7.1CCh. 7 - Prob. 7.2CCh. 7 - Prob. 7.3.1CCh. 7 - Prob. 7.3.2CCh. 7 - Effect of depreciation on net income Einstein...Ch. 7 - Prob. 7.4CCh. 7 - Prob. 7.5CCh. 7 - Prob. 7.6C
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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.arrow_forwardThe 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. 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: 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.arrow_forwardAllocating 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 1. 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 L. 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 0. 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 (1) 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 income statement and balance sheet if the cost of paving the parking lot of 21,600 [payment (0)] was incorrectly classified as Land rather than Land Improvements? Assume Land Improvements are depreciated over a 10-year life using the double-declining-balance method.arrow_forward
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