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1. Is carrying value ever the same as market valuc?

1. Is carrying value ever the same as market valuc?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PPP-LO1 (1).pdf Questions: 1. Is carrying value ever the same as market value? 2. What incentive does a company have to allocate more of a group purchase price to land than to building? 3. Gallon Auto purchased a neighboring lot for a new building and parking lot. Indicate whether each of the following expenditures is properly charged to (a) Land, (b) Land Improvements, or (c) Buildings: a. Paving costs b. Architects' fee for building design c. Cost of clearing the property d. Cost of the property e. Building construction costs around the property g. Building permit h. Interest on the construction loan 4. Cergo Computers constructed a new training center in 2014, which you have been hired to manage. A review of the accounting records shows the following expenditures debited to an asset account called Training Center: Attorney's fee, land acquisition Cost of land Architect's fee, building design Building Parking lot and sidewalk Electrical wiring, building Landscaping Cost of surveying land Training equipment, tables, and chairs Installation of training equipment Cost of grading the land Cost of changes in building to soundproof rooms Total account balance $ 34,900 598,000 102,000 1.020.000 135,600 164,000 55,000 9,200 136,400 68,000 14,000 59.200 $2,396,300 During the center's construction, an employee of Cergo worked full-time overseeing the project. He spent two months on the purchase and preparation of the site, six months on the construction, one month on land improvements, and one month on equipment installation and training-room furniture purchase and setup. His salary of $64,000 during this ten-month period was charged to Administrative Expense. The training center was placed in operation on November 1 Required 1. Prepare a schedule with the following four column (account) headings: Land, Land Improvements, Building, and Equipment. Place each of the above expenditures in the appropriate column. Total the columns. 2. What impact does the classification of the items among several accounts have on evaluating the profitability performance of the company?
Transcribed Image Text:PPP-LO1 (1).pdf Questions: 1. Is carrying value ever the same as market value? 2. What incentive does a company have to allocate more of a group purchase price to land than to building? 3. Gallon Auto purchased a neighboring lot for a new building and parking lot. Indicate whether each of the following expenditures is properly charged to (a) Land, (b) Land Improvements, or (c) Buildings: a. Paving costs b. Architects' fee for building design c. Cost of clearing the property d. Cost of the property e. Building construction costs around the property g. Building permit h. Interest on the construction loan 4. Cergo Computers constructed a new training center in 2014, which you have been hired to manage. A review of the accounting records shows the following expenditures debited to an asset account called Training Center: Attorney's fee, land acquisition Cost of land Architect's fee, building design Building Parking lot and sidewalk Electrical wiring, building Landscaping Cost of surveying land Training equipment, tables, and chairs Installation of training equipment Cost of grading the land Cost of changes in building to soundproof rooms Total account balance $ 34,900 598,000 102,000 1.020.000 135,600 164,000 55,000 9,200 136,400 68,000 14,000 59.200 $2,396,300 During the center's construction, an employee of Cergo worked full-time overseeing the project. He spent two months on the purchase and preparation of the site, six months on the construction, one month on land improvements, and one month on equipment installation and training-room furniture purchase and setup. His salary of $64,000 during this ten-month period was charged to Administrative Expense. The training center was placed in operation on November 1 Required 1. Prepare a schedule with the following four column (account) headings: Land, Land Improvements, Building, and Equipment. Place each of the above expenditures in the appropriate column. Total the columns. 2. What impact does the classification of the items among several accounts have on evaluating the profitability performance of the company?
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