On March 1, 2022, Crane Company acquired real estate, on which it planned to construct a small office building, by paying $75,500 in cash. An old warehouse on the property was demolished at a cost of $7,300; the salvaged materials were sold for $1,520. Additional expenditures before construction began included $1,020 attorney’s fee for work concerning the land purchase, $4,050 real estate broker’s fee, $8,520 architect’s fee, and $13,100 to put in driveways and a parking lot. (a) Determine the amount to be reported as the cost of the land.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
On March 1, 2022, Crane Company acquired real estate, on which it planned to construct a small office building, by paying $75,500 in cash. An old warehouse on the property was demolished at a cost of $7,300; the salvaged materials were sold for $1,520. Additional expenditures before construction began included $1,020 attorney’s fee for work concerning the land purchase, $4,050 real estate broker’s fee, $8,520 architect’s fee, and $13,100 to put in driveways and a parking lot.
(a) Determine the amount to be reported as the cost of the land.
| Cost of land |
$Enter a dollar amount
|
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
