E10-5 (Page 10– 31) – Allegro Supply plc, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Equipment. Abstract company's fee for title search £520 Architect's fees 3,170 Cash paid for land and dilapidated building thereon 92,000 Removal of old building £20,000 Less: Residual value 5,500 14,500 Interest on short-term loans during construction 7,400 Excavation before construction for basement 19,000 Equipment purchased (subject to 2% cash discount, which was not taken) 65,000 Freight on equipment purchased 1,340 Storage charges on equipment, necessitated by non-completion of building when 2,180 equipment was delivered New building constructed (building construction took 6 months from date of purchase 485,000 of land and old building) Assessment by city for drainage project 1,600 Hauling charges for delivery of equipment from storage to new building 620 Installation of equipment 2,000 Trees, shrubs, and other landscaping after completion of building(permanent in nature) 5,400 Instructions Determine the amounts that should be debited to Land, to Buildings, and to Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Indicate how any costs not debited to these accounts should be recorded.
E10-5 (Page 10– 31) – Allegro Supply plc, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Equipment. Abstract company's fee for title search £520 Architect's fees 3,170 Cash paid for land and dilapidated building thereon 92,000 Removal of old building £20,000 Less: Residual value 5,500 14,500 Interest on short-term loans during construction 7,400 Excavation before construction for basement 19,000 Equipment purchased (subject to 2% cash discount, which was not taken) 65,000 Freight on equipment purchased 1,340 Storage charges on equipment, necessitated by non-completion of building when 2,180 equipment was delivered New building constructed (building construction took 6 months from date of purchase 485,000 of land and old building) Assessment by city for drainage project 1,600 Hauling charges for delivery of equipment from storage to new building 620 Installation of equipment 2,000 Trees, shrubs, and other landscaping after completion of building(permanent in nature) 5,400 Instructions Determine the amounts that should be debited to Land, to Buildings, and to Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. Indicate how any costs not debited to these accounts should be recorded.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:E10-5 (Page 10 – 31) – Allegro Supply plc, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and
to Equipment. Abstract company's fee for title search £520
Architect's fees 3,170
Cash paid for land and dilapidated building thereon 92,000
Removal of old building £20,000
Less: Residual value 5,500
14,500
Interest on short-term loans during construction 7,400
Excavation before construction for basement 19,000
Equipment purchased (subject to 2% cash discount, which was not taken) 65,000
Freight on equipment purchased 1,340
Storage charges on equipment, necessitated by non-completion of building when 2,180
equipment was delivered
New building constructed (building construction took 6 months from date of purchase 485,000
of land and old building)
Assessment by city for drainage project 1,600
Hauling charges for delivery of equipment from storage to new building 620
Installation of equipment 2,000
Trees, shrubs, and other landscaping after completion of building(permanent in nature) 5,400
Instructions
Determine the amounts that should be debited to Land, to Buildings, and to Equipment. Assume the benefits of capitalizing interest during
construction exceed the cost of implementation. Indicate how any costs not debited to these accounts should be recorded.
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