Give correct answer this financial accounting question Falcon Industries purchased land in 2017 for the purpose of constructing anew corporate office. The company incurred the following costs in 2017:Cost of land: $650,000Legal fees required to purchase land: $25,000Cost of demolishing an old warehouse on the land: $60,000Proceeds from the sale of scrap metal from the old warehouse: $12,000Construction costs of the new corporate office incurred so far: $300,000At what amount should Falcon Industries capitalize the land?

Step 1: Define Capitalization of LandCapitalization of Land refers to recording the cost of…

Answered: Falcon Industries purchased land in…

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?
On March 1, 2017, Sunland Company acquired real estate, on which it planned to construct a small office building, by paying $84,000 in cash. An old warehouse on the property was demolished at a cost of $9,000; the salvaged materials were sold for $1,860. Additional expenditures before construction began included $1,360 attorney's fee for work concerning the land purchase, $4,900 real estate broker's fee, $8,860 architect's fee, and $14,800 to put in driveways and a parking lot. (a) Determine the amount to be reported as the cost of the land. Cost of land
On March 1, 2017, Geoffrey Company acquired real estate, on which it planned to construct a small office building, by paying $85,000 in cash. An old warehouse on the property was demolished at a cost of $8,200; the salvaged materials were so for $2,200. Additional expenditures before construction began included $1,500 attorney's fee for work concerning the land purchase, $5,500 real estate broker's fee, $9,100 architect's fee, and $16,000 to put in driveways and a parking lot. Instructions (a) Determine the amount to be reported as the cost of the land. (b) For each cost not used in part (a), indicate the account to be increased
In March, 2017, Mallory Mines Co. purchased a coal mine for $8,000,000. Removable coal is estimated at 1,500,000 tons. Mallory is required to restore the land at an estimated cost of $960,000. The company incurred $200,000 of development costs preparing the mine for production. During 2017, 360,000 tons were removed and sold. The total amount of depletion that Mallory should record for 2017 is Select one: a. $2,428,800. b. $2,198,400. • c. $1,619,200. d. $1,465,600.
On March 1, 2016, Beldon Corporation purchased land as a factory site for $60,000. An old building on the prop- erty was demolished, and construction began on a new building that was completed on December 15, 2016. Costs incurred during this period are listed below: $ 4,000 Demolition of old building Architect's fees (for new building) Legal fees for title investigation of land Property taxes on land (for period beginning March 1, 2016) 12,000 2,000 3,000 500,000 5,000 Construction costs Interest on construction loan Salvaged 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.
On September 10, 2018, Harry Co. incurred the following costs for one of its printing presses:Purchase of attachment $65,000Installation of attachment 5,000Replacement parts for renovation of press 18,000Labor and overhead in connection with renovation of press 7,000Neither the attachment nor the renovation increased the estimated useful life of the press. However, the renovation resulted in significantly increased productivity. What amount of the costs should be capitalized?a. $0.b. $77,000.c. $88,000.d. $95,000.
On February 1, 2010, Morgan Company purchased a parcel of land as a factory site for $200,000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2010. Costs incurred during this period are listed below: $20,000 - Demolition of old building $35,000 - Architect's fees $5,000 - Legal fees for title investigation and purchase contract. $1,090,000 - Construction costs Salvaged materials resulting from demolition were sold for $10,000. Morgan should record the cost of the land and new building, respectively, as: $225,000 and $1,115,000 $210,000 and $1,130,000 $210,000 and $1,125,000 $215.000 and $1.125.000
On December 1, 2010, Hogan Co. purchased a tract of land as a factory site for $800,000. The old building on the property was razed, and salvaged materials resulting from demolition were sold. Additional costs incurred and salvage proceeds realized during December 2010 were as follows: 150. Cost to raze old building Legal fees for purchase contract and to record ownership Title guarantee insurance Proceeds from sale of salvaged materials $70,000 10,000 16,000 8,000 In Hogan's December 31, 2010 statement of financial position, what amount should be reported as land? a. $826,000. b. $862,000. c. $888,000. d. $896,000.
On June 18, 2017, Dell Printing Co. incurred the following costs for one of its printing presses: Purchase of collating and stapling attachment $84,000 Installation of attachment 36,000 Replacement parts for overhaul of press 26,000 Labor and overhead in connection with overhaul 14,000 The overhaul resulted in a significant increase in production. Neither the attachment nor the overhaul increased the estimated useful life of the press. What amount of the above costs should be capitalized? $120,000 $84,000 $160,000 $0
On February 1, 2020, Nelson Corporation purchased a parcel of land as a factory site for $320,000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2020. Costs incurred during this period are listed below: Demolition of pold building $20,000 Arcchitects fees $35,000 Legal Fees for title investigation and purchase contract $5,000 Contruction Cost $1,390,000 Salvaged materials resulting from demolition were sold for $10,000. Nelson should record the cost of the land and new building, respectively, as A) $330,000 and $1,425,000.…
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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