Roberto Company purchased a P4,000,000 tract of land as an investment property. The entity razed an old building on the property. Demolition of old building 200,000 Proceeds from sale of salvaged materials Legal fees for purchase contract and recording ownership Title guarantee insurance Payment of property taxes in arrears Option paid for an alternative land not acquired Special assessment for city improvements 20,000 150,000 50,000 100,000 30,000 120,000 What is the cost of the land? A. 4,600,000 B. 4,420,000 C. 4,480,000 D. 4,500,000

Roberto Company purchased a P4,000,000 tract of land as an investment property. The entity razed an old building on the property. Demolition of old building 200,000 Proceeds from sale of salvaged materials Legal fees for purchase contract and recording ownership Title guarantee insurance Payment of property taxes in arrears Option paid for an alternative land not acquired Special assessment for city improvements 20,000 150,000 50,000 100,000 30,000 120,000 What is the cost of the land? A. 4,600,000 B. 4,420,000 C. 4,480,000 D. 4,500,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following cases are independent. Case A Starling Ltd. bought a building for $1,330,000. Before using the building, the following expenditures were made: Repair and renovation of building Construction of new paved driveway Upgraded landscaping Wiring Deposits with utilities for connections Sign for front and back of building, attached to roof Installation of fence around property Case B Lark Company purchased a $33,400 tract of land for a new manufacturing facility. Lark demolished an old building on the property and sold the materials it salvaged from the demolition. Lark incurred additional costs and realized salvage proceeds as follows: Demolition of old building Routine maintenance (mowing) done on purchase Proceeds from sale of salvaged materials Legal fees Title guarantee insurance $129,000 35,800 4,750 16,700 2,775 17,450 14,750 $ 33,150 2,775 13,450 10,950 6,425
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On January 1, 2020, Williamsburg Inc. acquired a piece of land to construct a manufacturing plant. You have the following information about this transaction: $240,000 4% of price $5,000 Price of land Tax on transfer of land Legal free to transfer property of land to Williamsburg $6,000 $1,000 $860,000 $2,100 $6,400 Cost of demolishing old building on the land Income from scrap that was sold of old building Cost of manufacturing building construction Cost of insurance during construction Cost of annual insurance on manufacturing building after the construction is finished Cost to repair a piece of equipment used in the $1,000 factories construction Management decided to allocate the following amounts to the parts of the factory building, and estimated the corresponding useful lives and residual values as follows: Allocated cost Useful life Residual value Allocated Cost Useful Life Residual Value $20,000 $1,000 $0 $4,000 $10,000 Windows 10 years $20,000 $100,000 Furnace 10 years…
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