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 Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter4: Balance Sheet: Presenting And Analyzing Resources And Financing

Section: Chapter Questions

Problem 7Q

See similar textbooks

Similar questions

Kmu
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 old building for $935,000 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 Prepare a single journal entry to record the above costs assuming all transactions are paid in cash. View transaction list Journal entry worksheet
A company purchased a track of land with the intent to use the land to put a new building. However, an old building is sitting where the new building is to be constructed, and the old building must be removed at a cost of $10,000. Should the cost of removing the old building be part of the cost of the building or be part of the cost of the land? Please explain:
Nicko Company purchased a tract of land as a factory site. Problem 28-5 (IAA) An old building was demolished and construction began o the new building. Purchase price of land and an old building Fair value of old building Cost of demolishing old building Title insurance and legal fees to purchase land Architect fee New building construction cost Survey before construction Building permit or payment to city hall for approval of building construction Excavation before new construction Liability insurance during construction New fence surrounding the new building Driveway, parking bay and safety lighting Cost of trees, shrube and other landscaping Cost of lighting and signage 4,500,000 250,000 300,000 200,000 950,000 8,000,000 100,000 150,000 200,000 100,000 100,000 550,000 300,000 100,000 1. What is the cost of the land? 4,3 50,000 a. 4,550,000 b. 4,800,000 c. 4,850,000 d. 4,450,000 2. What is the cost of the new building? a. 9,700,000 b. 9,750,000 c. 9,800,000 d. 9,950,000 3. What is…
Merchant Company purchased property for a building site. The costs associated with the property were: Purchase price Real estate commissions Legal fees Expenses of clearing the land Expenses to remove old building What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building? Multiple Choice $181,300 to Land; $20,800 to Building. $196,800 to Land; $1,500 to Building. $195,500 to Land; $5,300 to Building. $199,300 to Land; $0 to Building. $ 180,000 15,500 1,300 2,500 1,500 $200,800 to Land; $0 to Building.
Show the complete solution of the following: 1. What is the cost of the land?2. What is the cost of the land improvement?3. What is the cost of the building?
During the current year, Alanna Co. had the following transactions pertaining to its new office building. Purchase price of land Legal fees for contracts to purchase land Architech fees Demolition of the old building on site Sale of scrap from old building Construction cost of new 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. $130,000 5,000 20,000 8,000 7,000 610,000 B. What should Alanna Co. record on its books for the building?
Which of the following are the capitalized coats of the land and the new building, respectively?
Smatter Corporation purchased land for a new building. Which of the following costswould not be included in the cost of the land?a. Purchase price of the landb. Cost of demolishing an old garage located on the landc. Cost of a new parking lot constructed on the landd. Brokerage commission paid to the real estate agent who handled the land transaction
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 old building for $957,000 cash. The old building was demolished to make way for the needed new building. Following is information regarding the demolition of the old building and construction of the new one.Construction cost of new buildingCost for parking lotDemolition of old building$ 8,912,000305,000299,000Prepare a single journal entry to record the above costs assuming all transactions are paid in cash. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Merchant Company purchased property for a building site. The costs associated with the property were: What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?
Smatter Corporation purchased land for a new building. Which of the following costs would not be included in the cost of the land? a. Purchase price of the land b. Cost of demolishing an old garage located on the land c. Cost of a new parking lot constructed on the lane d. Brokerage commission paid to the real estate agent who handled the land transaction