Sunland Enterprises incurred several costs related to the acquisition of plant assets. Purchase price of land and dilapidated building $ 301600 Real estate broker's commission 19720 Demolition costs of dilapidated building 25520 Architect's fees and building permits 27840 Payments to contract for building construction 1009200 Purchase of new furniture and equipment 85840 Actual interest costs during building construction 156600 Actual interest cost after completion of building construction 139200 Costs of walks, driveways, and parking lot 63800 At what amount should the building be recorded in Sunland’s accounting records? $ 1009200 $ 1193640 $ 1219160 $ 1037040
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.
Sunland Enterprises incurred several costs related to the acquisition of plant assets.
| Purchase price of land and dilapidated building | $ 301600 | |
| Real estate broker's commission | 19720 | |
| Demolition costs of dilapidated building | 25520 | |
| Architect's fees and building permits | 27840 | |
| Payments to contract for building construction | 1009200 | |
| Purchase of new furniture and equipment | 85840 | |
| Actual interest costs during building construction | 156600 | |
| Actual interest cost after completion of building construction | 139200 | |
| Costs of walks, driveways, and parking lot | 63800 |
At what amount should the building be recorded in Sunland’s accounting records?
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