Company ABC purchased a building on 1/1/2022. The purchase price of the building was $1,000,000. The company decided to demolish the building, which cost $200,000, and built a new structure which cost $2,000,000 to build. Construction was completed on 6/1/2022. The company assumes that the building will have a 40 year useful life and no salvage value. Company ABC uses the straight-line method to account for depreciation. *ALL journal entries should take the form: Dr. Account (Y) $$$ Cr. Account (Y) $$$ A. Record the journal entry for the acquisition of the building on 1/1/2022 B. What is the balance of the newly constructed building on 6/1/2022? There are NO adjusting entries that occur over the 5 month period because the building is not in service or being used C. Record any required journal entries for the building on 12/31/2022. Assume this is the close of the fiscal year for Company ABC D. On January 1, 2023, Company ABC learns the building has caught on fire because the employees partied too hard on New Year’s Eve. As a result, the company estimates that the net book value of the asset needs to be reduced by 50%. Further, the company now estimates that the building will only have a remaining useful life of 20 years. Record the journal entry on January 1 E. Record any required journal entries for the building on 12/31/2023. Assume this is the close of the fiscal year for Company ABC

Name: Company ABC purchased a building on 1/1/2022. The purchase price of th
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Description: Company ABC purchased a building on 1/1/2022. The purchase price of the building was $1,000,000. The company decided to demolish the building, which cost $200,000, and built a new structure which cost $2,000,000 to build. Construction was completed o

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 66P: At the end of 2020, Magenta Manufacturing Company discovered that construction cost had been...

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Company ABC purchased a building on 1/1/2022. The purchase price of the building was $1,000,000. The company decided to demolish the building, which cost $200,000, and built a new structure which cost $2,000,000 to build. Construction was completed on 6/1/2022. The company assumes that the building will have a 40 year useful life and no salvage value. Company ABC uses the straight-line method to account for depreciation. *ALL journal entries should take the form: Dr. Account (Y) $$$ Cr. Account (Y) $$$ A. Record the journal entry for the acquisition of the building on 1/1/2022 B. What is the balance of the newly constructed building on 6/1/2022? There are NO adjusting entries that occur over the 5 month period because the building is not in service or being used C. Record any required journal entries for the building on 12/31/2022. Assume this is the close of the fiscal year for Company ABC D. On January 1, 2023, Company ABC learns the building has caught on fire because the employees partied too hard on New Year’s Eve. As a result, the company estimates that the net book value of the asset needs to be reduced by 50%. Further, the company now estimates that the building will only have a remaining useful life of 20 years. Record the journal entry on January 1 E. Record any required journal entries for the building on 12/31/2023. Assume this is the close of the fiscal year for Company ABC

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