Problem 26-11 (IAA) Paragon Company incurred the following costs during the eurrent year in relation to property, plant and equipment: Cash paid for purchase of land Mortgage assumed on the land purchased, including 2,500,000' interest accrued Realtor commission 1,000,000 300,000 50,000 Legal fees, realty taxes and documentation expenses Amount paid to relocate persons squatting on the property 100,000 Cost of tearing down an old building on the land to make room for construction of new building Salvage value of the old building demolished Cost of fencing the property after completion Amount paid to the contractor for the building constructed 5,000,000 Building permit fee Еxcacation Architect fée Interest that would have been earned had the money used during the period of construction been invested Invoice cost of machine acquired Freight, unloading and delivery charges Custom dutiés and other charges Allowances and hotel accommodation, paid to foreign technicians during installation and test run of machine 400,000 200,000 50,000 110,000 50,000 50,000 200,000 150,000 2,000,000 60,000 140,000 1. What amount should be capitalized as cost of land? a. 3,950,000 b. 4,100,000 c. 3,850,000 d. 3,800,000 2. What amount should be capitalized as cost of building? а. 5,300,000 b. 5,410,000 c. 5,450,000 d. 5,560,000 3. What amount should be capitalized as cost of machine? a. 2,600,000 b. 2,000,000 c. 2,200,000 d. 2,560,000
Problem 26-11 (IAA) Paragon Company incurred the following costs during the eurrent year in relation to property, plant and equipment: Cash paid for purchase of land Mortgage assumed on the land purchased, including 2,500,000' interest accrued Realtor commission 1,000,000 300,000 50,000 Legal fees, realty taxes and documentation expenses Amount paid to relocate persons squatting on the property 100,000 Cost of tearing down an old building on the land to make room for construction of new building Salvage value of the old building demolished Cost of fencing the property after completion Amount paid to the contractor for the building constructed 5,000,000 Building permit fee Еxcacation Architect fée Interest that would have been earned had the money used during the period of construction been invested Invoice cost of machine acquired Freight, unloading and delivery charges Custom dutiés and other charges Allowances and hotel accommodation, paid to foreign technicians during installation and test run of machine 400,000 200,000 50,000 110,000 50,000 50,000 200,000 150,000 2,000,000 60,000 140,000 1. What amount should be capitalized as cost of land? a. 3,950,000 b. 4,100,000 c. 3,850,000 d. 3,800,000 2. What amount should be capitalized as cost of building? а. 5,300,000 b. 5,410,000 c. 5,450,000 d. 5,560,000 3. What amount should be capitalized as cost of machine? a. 2,600,000 b. 2,000,000 c. 2,200,000 d. 2,560,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 26-11 (IAA)
Paragon Company incurred the following costs during the
eurrent year in relation to property, plant and equipmenț:
2,500,000 '
Cash paid for purchase of land
Mortgage assumed on the land purchased, including
interest accrued
Realtor commission
1,000,000
300,000
50,000
Legal fees, realty taxes and documentation expenses
Amount paid to relocate persons squatting on the property 100,000
Cost of tearing down an old building on the land to make
room for construction of new building
Salvage value of the old building demolished
Cost of fencing the property after completion
Amount paid to the contractor for the building constructed 5,000,000
Building permit fee
Еxcacation
Architect fée
Interest that would have been earned had the money used
during the period of construction been invested
Invoice cost of machine acquired
Freight, unloading and delivery charges
Custom dutiés and other charges
Allowances and hotel accommodation, paid to foreign
technicians during installation and test run of machine 400,000
200,000
50,000
110,000
50,000
50,000
200,000
150,000
2,000,000
60,000
140,000
1. What amount should be capitalized as cost of land?
а. 3,950,000
b. 4,100,000
c. 3,850,000
d. 3,800,000
2. What amount should be capitalized as cost of building?
a. 5,300,000
b. 5,410,000
с. 5,450,000
d. 5,560,000
3. What amount should be capitalized as cost of machine?
a. 2,600,000
b. 2,000,000
с. 2,200,000
d. 2,560,000
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