intruction: C&M Securities made several expenditures during the current fiscal year, including the following: Amount Description of Expenditure 1. $150,000 Acquisition of a piece of land to be used as a building site 2. 3,000 Demolition of a small building on the land, to make way for the new building 3. 7,500 Levelling of the land to prepare it for construction of the new building 4. 290,000 Construction of the new building 5. 12,000 Paving of a parking lot beside the building 6. 6,000 Addition of decorative landscaping around the building (such as planting flowers and ornamental shrubs) 7. 80,000 Purchase of a new piece of equipment 8. 6,000 Sales taxes on the new equipment 9. 3,000 Installation of the new equipment 10. 1,500 Testing and adjustment of the new equipment prior to its use 11. 1,000 Minor repairs to some old equipment 12. 7,000 Major overhaul of an old piece of equipment, extending its useful life by three years 13. 1,200 Routine maintenance of equipment 14. 2,000 Replacement of windows broken by disgruntled employees during a labour dispute Required 1. For each of the items listed above, indicate whether the cost should be debited to land, buildings, equipment, land improvements, or an expense account. 2. For each item that was expensed, explain why it was not appropriate to add the amount to an asset.
intruction: C&M Securities made several expenditures during the current fiscal year, including the following: Amount Description of Expenditure 1. $150,000 Acquisition of a piece of land to be used as a building site 2. 3,000 Demolition of a small building on the land, to make way for the new building 3. 7,500 Levelling of the land to prepare it for construction of the new building 4. 290,000 Construction of the new building 5. 12,000 Paving of a parking lot beside the building 6. 6,000 Addition of decorative landscaping around the building (such as planting flowers and ornamental shrubs) 7. 80,000 Purchase of a new piece of equipment 8. 6,000 Sales taxes on the new equipment 9. 3,000 Installation of the new equipment 10. 1,500 Testing and adjustment of the new equipment prior to its use 11. 1,000 Minor repairs to some old equipment 12. 7,000 Major overhaul of an old piece of equipment, extending its useful life by three years 13. 1,200 Routine maintenance of equipment 14. 2,000 Replacement of windows broken by disgruntled employees during a labour dispute Required 1. For each of the items listed above, indicate whether the cost should be debited to land, buildings, equipment, land improvements, or an expense account. 2. For each item that was expensed, explain why it was not appropriate to add the amount to an asset.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:intruction: C&M Securities made several expenditures during the current fiscal
year, including the following:
Amount Description of Expenditure
1. $150,000 Acquisition of a piece of land to be used as a building site
2. 3,000 Demolition of a small building on the land, to make way for the
new building
3. 7,500 Levelling of the land to prepare it for construction of the new
building
4. 290,000 Construction of the new building
5. 12,000 Paving of a parking lot beside the building
6. 6,000 Addition of decorative landscaping around the building (such as
planting flowers and ornamental shrubs)
7. 80,000 Purchase of a new piece of equipment
8. 6,000 Sales taxes on the new equipment
9. 3,000 Installation of the new equipment
10. 1,500 Testing and adjustment of the new equipment prior to its use
11. 1,000 Minor repairs to some old equipment
12. 7,000 Major overhaul of an old piece of equipment, extending its
useful life by three years
13. 1,200 Routine maintenance of equipment
14. 2,000 Replacement of windows broken by disgruntled employees
during a labour dispute
Required
1. For each of the items listed above, indicate whether the cost should be
debited to land, buildings, equipment, land improvements, or an expense
account.
2. For each item that was expensed, explain why it was not appropriate to add
the amount to an asset.
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