Merchant Company purchased property for a building site. The costs associated with the property were: Purchase price Real estate commissions Legal fees Expenses of clearing the land. Expenses to remove old building $187,000 16,200 2,000 3,200 2,200 What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

Merchant Company purchased property for a building site. The costs associated with the property were: Purchase price Real estate commissions Legal fees Expenses of clearing the land. Expenses to remove old building $187,000 16,200 2,000 3,200 2,200 What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Several expenditures are listed below. Indicate whether or not each expenditure would be included in the cost of acquisition for each item below. The answer box provides two options, Yes (if the expenditure would be included ) or No, (if the expenditure would not be included.) Cost testing materials and labor in testing a purchased machine Yes before use Compensation for injury to No construction worker Cost of overhaul to a used Yes machine purchased before initial use Cost of tearing down a building Yes on newly acquired land Repairs to a new machine Yes damaged while moving it into > > > > >
Gallon Auto purchased a neighboring lot for a new building and parking lot. Indicate whether each of the following expenditures is properly charged to (a) Land, (b) Land Improvements, or (c) Buildings:a. Paving costsb. Architects’ fee for building designc. Cost of clearing the propertyd. Cost of the propertye. Building construction costsf. Lights around the propertyg. Building permith. Interest on the construction loan
Please Solve In 20mins
XYZ Company had the following transactions pertaining to its new office building: Purchase price of land -P1,200.000; Legal fees for contracts to purchase land -P130,000; Architect's fee - P255,000: Demolition of old building on site -P310.000; Sale of scrap from old building -P71,000; Construction cost of new building (fully completed) -P2.450,000: Fire insurance policy on the newly constructed building for the whole year starting on the day it was completed -P250.000. At what amount should the building be shown in XYZ statement of financial position of?
A company purchased land for $91000 cash. Real estate brokers' commission was $6000 and $6900 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at O $69000. O $103900. O $91000. O $109900.
Good Influence, Inc. obtained a land with an old building, that will be accounted for under property, plant and equipment. The Company intends to demolish the old building, since the old building is already deemed unusable. The following information relates to the land and building: Purchase price of the land and building P3,500,000 Fair value of the land 3,000,000 Historical cost Land 2,000,000 Old building 6,000,000 Demolition costs 700,000 Which of the following statements are true? Group of answer choices The cost of the new building is P17,100,000 million. The amount of expense to be recognized is P700,000. Which is equal to the demolition costs…
Land, a building and equipment are acquired for a lump sum of $900,000. The market values of the land, building an equipment are $500,000, $600,000 and $200,000, respectively. What is the cost assigneed to the equipment? (Do not round to any intermediary calculations and round your final answer to the nearest dollar). A. $0 B. $900,000 C. $200,000 D. $138,462 thnaka sfor help appareicated
MAGANDANGEHEMPLO, Inc. obtained a land with an old building, that will be accounted for under property, plant and equipment. The Company intends to demolish the old building, to build a new building and will not use the old building prior to its demolition. The following information relates to the land and building: Purchase price of the land and building P3,500,000 Fair value: Land 3,000,000 Old building 2,000,000 Historical cost Land 2,000,000 Old building 6,000,000 Demolition costs 700,000 Construction cost of the new building…
Using the Cost Approach to property appraisal, determine the final appraised value of a building and the land the bulding is on based upon the following: - Land Value-$6 million; > Building Cost (psf) - $250; > Total area (psf)-$100,000: > Developer's profit - S800,000; > Economic obsolescence - S1.5 million; > Functional obsolescence - $3 million; > Locational obsolescence - $2 million; > Curable depreciation - Si million; > Effective age -20 years: > Economic Age- 50 years. Oa $10.340,000 Ob.S14,380,000 OC S13,980.000 Od. 510,380,000 Oe. $8,380,000
Allocating payments and receipts to fixed asset accounts The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk. a. Fee paid to attorney for title search $2,000 b. Cost of real estate acquired as a plant site: Land 280,000 Building (to be demolished) 55,000 c. Delinquent real estate taxes on property, assumed by purchaser 15,000 d. Cost of razing and removing building acquired in (b) 5,000 e. Proceeds from sale of salvage materials from old building 3,000 * f. Special assessment paid to city for extension of water main to the property 29,000 g. Architect’s and engineer’s fees for plans and supervision 60,000 h. Premium on one-year insurance policy during construction 7,000 i. Cost of filling and grading land 13,000 j. Money borrowed to pay building…
Denver Co. acquired real estate for the construction of a building and other facilities. Operating equipment was also purchased and installed. Cost of land purchased as a building site Architect's fee for design of new building P170,000 23,000 28,000 Paid for the demolition of an old building on the building site purchased above Paid land tax on the real estate purchased as a building site 1,700 Paid Geodetic engineer 10,000 Paid excavation costs for the new building 15,000 Made the first payment to the building Contractor 250,000 Paid for equipment to be installed in the new building 148,000 Received from sale of salvaged materials from demolishing the old building Paid Civil engineer (6,800) 20,000 Made final payment to the building Contractor 350,000 Paid interest on building loan during Construction 22,000 Paid freight on equipment purchased 1,900 Paid installation costs of equipment 4,200 Paid for repair of equipment damaged during installation 2,700 Property ledger account…
Kmu