Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits ofcapitalizing interest during construction exceed the cost of implementation. Company uses net method to record discount. (Pleaseleave spaces blank if there is no answer. Do not enter zeros in those spaces.)Abstract feesArchitect'sfeesCash paid forBuildings1000000Machinery and Equipment0000000------ Swifty Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and toMachinery and Equipment.Abstract company's fee for title searchArchitect's feesCash paid for land and dilapidated building thereonRemoval of old buildingLess: SalvageInterest on short-term loans during constructionExcavation before construction for basementMachinery purchased (subject to 2% cash discount, which was not taken)Freight on machinery purchasedStorage charges on machinery, necessitated by noncompletion ofbuilding when machinery was deliveredNew building constructed (building construction took 6 months fromdate of purchase of land and old building)Assessment by city for drainage projectHauling charges for delivery of machinery from storage to new buildingInstallation of machineryTrees, shrubs, and other landscaping after completion of building(permanent in nature)$42,00011,550$1,0926,657182,70030,45015,54039,900115,5002,8144,5781,018,5003,3601,3024,20011,340

The cost of real estate, excluding the cost of any constructed assets on the property, is reported…

Answered: Swifty Supply Company, a newly formed…

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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Fitness Department purchased a building on a tract of land and allocated the entire cost of the purchase to building. Normally the company depreciates buildings over 40 years using the straight-line method with zero residual value and does not depreciate land. What is the impact of the improper accounting treatment of the purchase on the company's net income for the life of the building? a.understated b.unaffected c.overstated d.indeterminable from the information provided
Determining cost of land On-Time Delivery Company acquired an adjacent lot to construct a new warehouse, paying $41,000 in cash and giving a short-term note for $276,000. Legal fees paid were $1,330, delinquent taxes assumed were $12,400, and fees paid to remove an old building from the land were $17,000. Materials salvaged from the demolition of the building were sold for $4,800. A contractor was paid $963,700 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.
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