General accounting. Cordinal company purchased land in 2014 Cardinal Company purchased land in 2014 for the purpose of building anew factory. Cardinal incurred the following costs in 2014.Cost of landLegal fees required to purchase land$500,000$20,000Cost of tearing down the old building on the land $50,000Sale of bricks from old building$10,000New building costs incurred so far$200,000Land should be capitalized at what amount?a. $500,000.b. $700,000.c. $560,000.d. $520,000.

Step 1:- Define Capitalizing Fixed AssetsLand acquired by a firm should be recorded in the books of…

Answered: Cardinal Company purchased land in 2014…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles

Section: Chapter Questions

Problem 8.8MCP

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Capital versus Revenue Expenditures On January 1, 2014, Jose Company purchased a building for $200,000 and a delivery truck for $20,000. The following expenditures have been incurred during 2016: â€¢ The building was painted at a cost of $5,000. â€¢ To prevent leaking, new windows were installed in the building at a cost of $10,000. â€¢ To improve production, a new conveyor system was installed at a cost of $40,000. â€¢ The delivery truck was repainted with a new company logo at a cost of $1,000. â€¢ To allow better handling of large loads, a hydraulic lift system was installed on the truck at a cost of $5,000. â€¢ The trucks engine was overhauled at a cost of $4,000. Required Determine which of those costs should be capitalized. Also record the journal entry for the capitalized costs. Assume that all costs were incurred on January 1, 2016. Determine the amount of depreciation for the year 2016. The company uses the straight-line method and depreciates the building over 25 years and the truck over six years. Assume zero residual value for all assets. How would the assets appear on the balance sheet of December 31, 2016?
On July 1, 2016, Drenz Inc. purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below: Purchase price 925,000 Title Insurance 7,500 Legal fees to purchase land 5,000 Cost of razing old building on lot 42,500 Proceeds from sale of salvageable materials (6,000) Property taxes, January 1, 2016 - June 30, 2016 15,000 Cost of grading and filling building site 45,000 Cost of building construction 3,100,000 Interest on construction loan 60,000 Cost of constructing driveway 400,000 Cost of parking lot and fencing 60,000 Compute for the cost of the land?
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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
On February 1, 2021, KIKO Co. purchased a land and building for 10,000,000 as a factory site. The old building was not used (estimated useful life 5 years) and demolished right after the purchase. Construction began on a new building which was completed on November, 2024. Additional costs incurred are: Demolition of old building P 500,000 Proceeds from sale of salvaged materials 80,000 Architect’s fees 250,000 Legal fees for title investigation and purchase contract 50,000 Income earned on a vacant space rented as parking lot during construction 15,000 Construction cost 8,500,000 How much should KIKO record as the cost of the land and…
On March 1, 2018, Beldon Corporation purchased land as a factory site for $60,000. An old building on the property was demolished, and construction began on a new building that was completed on December 15, 2018. Costsincurred during this period are listed below:Demolition of old building $ 4,000Architect’s fees (for new building) 12,000Legal fees for title investigation of land 2,000Property taxes on land (for period beginning March 1, 2018) 3,000Construction costs 500,000Interest on construction loan 5,000Salvaged materials resulting from the demolition of the old building were sold for $2,000.Required:Determine the amounts that Beldon should capitalize as the cost of the land and the new building.

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