Bon Company has decided to expand its operations and has purchased land in the city for construction of a new manufacturing plant. The following costs were incurred: Land purchase price 2,500,000 Payment of delinquent property taxes 100,000 Title search and insurance 50,000 Option paid for an alternative land which was not acquired Cost of relocating informal settlers Special assessment for city improvements on water and sewer system Contract cost of new building 30,000 5,000 150,000 7,000,000 200,000 Architect fee Building permit Cost to destroy existing building on land (P10,000 worth of salvaged Material used in new building) 30,000 60,000 Excavation before new construction 110,000 Fire insurance on building – 1 year 40,000 The cost of the land and building should, respectively be

Bon Company has decided to expand its operations and has purchased land in the city for construction of a new manufacturing plant. The following costs were incurred: Land purchase price 2,500,000 Payment of delinquent property taxes 100,000 Title search and insurance 50,000 Option paid for an alternative land which was not acquired Cost of relocating informal settlers Special assessment for city improvements on water and sewer system Contract cost of new building 30,000 5,000 150,000 7,000,000 200,000 Architect fee Building permit Cost to destroy existing building on land (P10,000 worth of salvaged Material used in new building) 30,000 60,000 Excavation before new construction 110,000 Fire insurance on building – 1 year 40,000 The cost of the land and building should, respectively be

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Pointer Company buys a piece of property in north Toronto that has the following costs associated with the purchase: Invoice price for land and building = $303,500 Legal fees associated with the purchase = $12,000 Unpaid property taxes assumed by Pointer as part of the purchase agreement = $28,000 Cost of having property professionally appraised = $10,350 The appraisal report shows the building has an appraised market value of $400,000 and the land has an appraised value of $100,000. Required 1: What amount should be capitalized as the value of the land on Pointer's book? $ Required 2: What amount should be capitalized as the value of the building on Pointer's book? $ Required 3: If the property acquired will be depreciated in 40 years with no residual value (assume the straight-line depreciation is used), what is the depreciation expense for the first full year of use? $
China Express purchased land for $140,000. Prior to construction on the new building, the land had to be cleared of trees and brush. Construction costs incurred during the first year are listed below: Land clearing costs $ 5,000 Architect fees (for new building) 30,000 Legal fees for title investigation of land 1,000 Property taxes on land (for the first year) 2,500 Building construction costs 440,000 Required:Determine the amounts that should be recorded in the land and the new building accounts.
Please help
1
Denzar
The company DstriBut.inc decides to take a technological shift by replacing its old distribution center with a new one that is more oriented towards technology and less dependent on manpower. The entire installation is estimated at $6,000,000 amortized at the rate of 30% decreasing. An immediate expense of $30,000 (taxable and non-depreciable) is planned to ensure the training of the personnel who will operate on the new installations. This investment creates a working capital requirement of $400,000, fully recoverable. The company estimates to increase its operating cash flow by $1,500,000 before tax. On the other hand, the company must assume an expense for the maintenance and replacement of consumable components of new installations in the amount of $50,000 every 2 years. This investment will have a residual value of $2,500,000 at the end of the investment horizon, which is set at 5 years by senior management. The tax rate is 40% and the rate of return required by senior management…
The Flintstone Construction Company delivers dirt and stone from local quarries to its construction sites. A new truck that was purchased for a cost of $122,000 at the beginning of the year was expected to deliver 122,000 tons over its useful life. The following is a breakdown of the tons delivered during the year to each construction site: Construction Sites: Tons Delivered: Multiple Choice $12,767 $1,400 A 1,400 How much truck depreciation should be allocated to Site A? (Do not round intermediate calculations. Round your answer to the nearest dollar.) $1,220 B 2,900 None of the answers are correct. с 3,400 D 900
Kate Company submitted an offer to purchase a plot of land that was listed at $120,000. Kate's offer was 10% below the list price and was accepted. Kate paid $10,000 to remove an old structure in order to make the land ready for use as a building site. Title and attorney fees amounted to $3,000. Annual property taxes amounted to $5,000 per year. Based on this information, the cost of the land as shown on the balance sheet equals answer must be correct
In 2013, A MINING Corp. purchased property with natural resources for P 12,400,000 The property was relatively close to a large city and had an expected residual value of P 3,000,000 However, P 1,200,000 will have to be spent to restore the land for use. The following information relates to the use of the property: a) In 2013, A MINING Corp. spent P 800,000 in development costs and P 600,000 in buildings on the property. A MINING Corp. does not anticipate that the buildings will have any utility after the natural resources are depleted. b) In 2014 and 2016, P 600,000 and P 1,600,000, respectively, were spent for additional developments on the mine. c) The tonnage mined and estimated remaining tons for years 2013-2017 are as follows: Year /Tons Extracted remaining/Estimated Tons 2013 2014 1,500,000 2015 1,800,000 2016 1,700,000 2017 900,000 Required: 5,000,000 3,500,000 2,000,000 900,000 1. Prepare necessary journal entries in 2014 up to 2017 2. Determine the following: 2.a Depletion…
Auto purchased a $500,000 tract of land that is intended to be the site of a new office complex. The company incurred additional costs and realized salvage proceeds as follows: Demolilitipn of existing building on site: $75,000 Legal and other fees to close escrow: $15,000 Proceeds from sale of demolition scrap: $10,000 What would be the cost of land? A. $500,000 B. $575,000 C. $580,000 D. $590,000
Which of the following are the capitalized coats of the land and the new building, respectively?
Please help me