Acquisition of Land and Building On February 1, 2016, Edwards Corporation purchased a parcel of land as a factory site for $100,000. It demolished an old building on the property and began construction on a new building that was completed on October 2, 2016. Costs incurred during this period are: Demolition of old building $8,000 Architect's fees 25,000 Legal fees for title investigation and purchase contract 4,000 Construction costs 650,000 Edwards sold salvaged materials resulting from the demolition for $2,000. Required: 1. At what amount should Edwards record the cost of the land and the new building, respectively? If an input bax should be blank, enter a zero. Land Building Purchase price of land Demolition of old building Architect's fees Legal fees Construction costs Salvaged materials Total 2. If management misclassified a portion of the building's cost as part of the cost of the land, what would be the effect on the financial statements?
Acquisition of Land and Building On February 1, 2016, Edwards Corporation purchased a parcel of land as a factory site for $100,000. It demolished an old building on the property and began construction on a new building that was completed on October 2, 2016. Costs incurred during this period are: Demolition of old building $8,000 Architect's fees 25,000 Legal fees for title investigation and purchase contract 4,000 Construction costs 650,000 Edwards sold salvaged materials resulting from the demolition for $2,000. Required: 1. At what amount should Edwards record the cost of the land and the new building, respectively? If an input bax should be blank, enter a zero. Land Building Purchase price of land Demolition of old building Architect's fees Legal fees Construction costs Salvaged materials Total 2. If management misclassified a portion of the building's cost as part of the cost of the land, what would be the effect on the financial statements?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Acquisition of Land and Building
On February 1, 2016, Edwards Corporation purchased a parcel of land as a factory site for $100,000. It demolished an old building on the
property and began construction on a new building that was completed on October 2, 2016. Costs incurred during this period are:
Demolition of old building
$ 8,000
Architect's fees
25,000
Legal fees for title investigation and purchase contract
4,000
Construction costs
650,000
Edwards sold salvaged materials resulting from the demolition for $2,000.
Required:
1. At what amount should Edwards record the cost of the land and the new building, respectively?
If an input box should be blank, enter a zero.
Land
Building
Purchase price of land
Demolition of old building
Architect's fees
Legal fees
Construction costs
Salvaged materials
Total
2. If management misclassified a portion of the building's cost as part of the cost of the land, what would be the effect on the financial
statements?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1908dd21-cc72-4760-9c90-35855c870384%2F1592b19d-f072-4253-bfe1-9438e0d78759%2F3p6x9kq_processed.png&w=3840&q=75)
Transcribed Image Text:Acquisition of Land and Building
On February 1, 2016, Edwards Corporation purchased a parcel of land as a factory site for $100,000. It demolished an old building on the
property and began construction on a new building that was completed on October 2, 2016. Costs incurred during this period are:
Demolition of old building
$ 8,000
Architect's fees
25,000
Legal fees for title investigation and purchase contract
4,000
Construction costs
650,000
Edwards sold salvaged materials resulting from the demolition for $2,000.
Required:
1. At what amount should Edwards record the cost of the land and the new building, respectively?
If an input box should be blank, enter a zero.
Land
Building
Purchase price of land
Demolition of old building
Architect's fees
Legal fees
Construction costs
Salvaged materials
Total
2. If management misclassified a portion of the building's cost as part of the cost of the land, what would be the effect on the financial
statements?
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