A company needed a new building. It found a suitable location with an existing old building on the land. The company reached an agreement to buy the land and the building for $1,350,000 cash. The old building was demolished to make way for the needed new building. Following is information regarding the demolition of the old building and construction of the new one: Construction cost of new building Cost for parking lot Demolition of old building Proceeds from sále of salvaged materials from old building $ 8,900,000 $260,000 200,000 70,000 Required: 1) Prepare a single journal entry to record the above costs assuming all transactions are paid in cash. 2) Using your value of the building asset from requirement 1, compute depreciation for the new building assuming $30,000 salvage value and a useful life of 30 years using straight-line depreciation.

A company needed a new building. It found a suitable location with an existing old building on the land. The company reached an agreement to buy the land and the building for $1,350,000 cash. The old building was demolished to make way for the needed new building. Following is information regarding the demolition of the old building and construction of the new one: Construction cost of new building Cost for parking lot Demolition of old building Proceeds from sále of salvaged materials from old building $ 8,900,000 $260,000 200,000 70,000 Required: 1) Prepare a single journal entry to record the above costs assuming all transactions are paid in cash. 2) Using your value of the building asset from requirement 1, compute depreciation for the new building assuming $30,000 salvage value and a useful life of 30 years using straight-line depreciation.

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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