Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 10, Problem 2C
To determine
State the preceding expenditures capitalized by the company, explain the manner in which it
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Kmu
Teradene Corporation purchased land as a factory site and contracted with Maxtor Construction to construct a factory. Teradene made
the following expenditures related to the acquisition of the land, building, and equipment for the factory:
Purchase price of the land
Demolition and removal of old building
Clearing and grading the land before construction
Various closing costs in connection with acquiring the land
Architect's fee for the plans for the new building
Payments to Maxtor for building construction
Equipment purchased
Freight charges on equipment
Trees, plants, and other landscaping
Installation of a sprinkler system for the landscaping
Cost to build special platforms and install wiring for the equipment
Cost of trial runs to ensure proper installation of the equipment
Fire and theft insurance on the factory for the first year of use
Assets
In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar. In payment, Teradene paid $29,000 cash and…
Kirsh Corporation purchased land as a factory site and contracted with Heathercote Construction to construct a factory.
Kirsh made the following expenditures related to the acquisition of the land, building, and equipment for the factory:
Purchase price of the land
Demolition and removal of old building
Clearing and grading the land before construction
Various closing costs in connection with acquiring the land
Architect's fee for the plans for the new building
Payments to Heathercote for building construction
Equipment purchased
Freight charges on equipment
Trees, plants, and other landscaping
Installation of a sprinkler system for the landscaping
Cost to build special platforms and install wiring for the equipment
Cost of trial runs to ensure proper installation of the equipment
Fire and theft insurance on the factory for the first year of use
Assets
$ 1,350,000
95,000
225,000
In addition to the above expenditures, Kirsh purchased four forklifts from the Toronto Equipment Supply…
Chapter 10 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 10 - Prob. 1GICh. 10 - Prob. 2GICh. 10 - What is the relationship between the book value...Ch. 10 - Prob. 4GICh. 10 - Prob. 5GICh. 10 - Prob. 6GICh. 10 - What are asset retirement obligations? How should...Ch. 10 - Prob. 8GICh. 10 - Prob. 9GICh. 10 - Prob. 10GI
Ch. 10 - At what amount does a company record the cost of a...Ch. 10 - Prob. 12GICh. 10 - Prob. 13GICh. 10 - Prob. 14GICh. 10 - Prob. 15GICh. 10 - Prob. 16GICh. 10 - Prob. 17GICh. 10 - What is the distinction between a capital and an...Ch. 10 - Distinguish between additions and...Ch. 10 - Distinguish between ordinary repairs and...Ch. 10 - Prob. 21GICh. 10 - Hickory Company made a lump-sum purchase of three...Ch. 10 - Prob. 2MCCh. 10 - Electro Corporation bought a new machine and...Ch. 10 - Prob. 4MCCh. 10 - Lyle Inc. purchased certain plant assets under a...Ch. 10 - Ashton Company exchanged a nonmonetary asset with...Ch. 10 - Prob. 7MCCh. 10 - Prob. 8MCCh. 10 - Prob. 9MCCh. 10 - Prob. 10MCCh. 10 - On January 1, Duane Company purchases land at a...Ch. 10 - Prob. 2RECh. 10 - Utica Corporation paid 360,000 to purchase land...Ch. 10 - Prob. 4RECh. 10 - Prob. 5RECh. 10 - Prob. 6RECh. 10 - Nabokov Company exchanges assets with Faulkner...Ch. 10 - Prob. 8RECh. 10 - Dexter Construction Corporation is building a...Ch. 10 - Prob. 10RECh. 10 - Prob. 11RECh. 10 - Ricks Towing Company owns three tow trucks. During...Ch. 10 - Inclusion in Property, Plant, and Equipment...Ch. 10 - Prob. 2ECh. 10 - Acquisition Costs Voiture Company manufactures...Ch. 10 - Determination of Acquisition Cost In January 2019,...Ch. 10 - Asset Retirement Obligation Big Cat Exploration...Ch. 10 - Prob. 6ECh. 10 - Prob. 7ECh. 10 - Prob. 8ECh. 10 - Exchange of Assets Two independent companies,...Ch. 10 - Exchange of Assets Use the same information as in...Ch. 10 - Prob. 11ECh. 10 - Exchange of Assets Goodman Company acquired a...Ch. 10 - Exchange of Assets Use the same information as in...Ch. 10 - Prob. 14ECh. 10 - Self-Construction Harshman Company constructed a...Ch. 10 - Prob. 16ECh. 10 - Prob. 17ECh. 10 - Prob. 18ECh. 10 - Prob. 19ECh. 10 - Expenditures after Acquisition McClain Company...Ch. 10 - Prob. 21ECh. 10 - Prob. 1PCh. 10 - Classification of Costs Associated with Assets The...Ch. 10 - Prob. 3PCh. 10 - Comprehensive At December 31, 2018, certain...Ch. 10 - Assets Acquired by Exchange Bremer Company made...Ch. 10 - Assets Acquired by Exchange Bussell Company...Ch. 10 - Self-Construction Olson Machine Company...Ch. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Events Subsequent to Acquisition The following...Ch. 10 - Prob. 11PCh. 10 - Prob. 1CCh. 10 - Prob. 2CCh. 10 - Cost Issues Deskin Company purchased a new machine...Ch. 10 - Prob. 4CCh. 10 - Prob. 5CCh. 10 - Prob. 6CCh. 10 - Prob. 7CCh. 10 - Prob. 9CCh. 10 - Prob. 10CCh. 10 - Prob. 11C
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- A company purchased a track of land with the intent to use the land to put a new building. However, an old building is sitting where the new building is to be constructed, and the old building must be removed at a cost of $10,000. Should the cost of removing the old building be part of the cost of the building or be part of the cost of the land? Please explain:arrow_forwardA company needed a new building. It found a suitable location with an existing old building on the land. The company reached an agreement to buy the land and the building for $1,350,000 cash. The old building was demolished to make way for the needed new building. Following is information regarding the demolition of the old building and construction of the new one: Construction cost of new building Cost for parking lot Demolition of old building Proceeds from sále of salvaged materials from old building $ 8,900,000 $260,000 200,000 70,000 Required: 1) Prepare a single journal entry to record the above costs assuming all transactions are paid in cash. 2) Using your value of the building asset from requirement 1, compute depreciation for the new building assuming $30,000 salvage value and a useful life of 30 years using straight-line depreciation.arrow_forwardNicko Company purchased a tract of land as a factory site. Problem 28-5 (IAA) An old building was demolished and construction began o the new building. Purchase price of land and an old building Fair value of old building Cost of demolishing old building Title insurance and legal fees to purchase land Architect fee New building construction cost Survey before construction Building permit or payment to city hall for approval of building construction Excavation before new construction Liability insurance during construction New fence surrounding the new building Driveway, parking bay and safety lighting Cost of trees, shrube and other landscaping Cost of lighting and signage 4,500,000 250,000 300,000 200,000 950,000 8,000,000 100,000 150,000 200,000 100,000 100,000 550,000 300,000 100,000 1. What is the cost of the land? 4,3 50,000 a. 4,550,000 b. 4,800,000 c. 4,850,000 d. 4,450,000 2. What is the cost of the new building? a. 9,700,000 b. 9,750,000 c. 9,800,000 d. 9,950,000 3. What is…arrow_forward
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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 6,425arrow_forwardGlenwood Industrial Gear, Inc. incurred the following costs associated with the purchase of a piece of land that it will use to build a retail store: Purchase price of the land $450,000 Cash received from Sale of salvaged parts already on land $20,000 Current year property taxes $3,400 Demolition of the old building $30,000 Ground breaking ceremony (food and supplies) $3,500 Back Property Taxes $14,700 Land preparation and leveling $17,500 What amount should Glenwood Industrial Gear, Inc. capitalize for the land asset? Group of answer choicesarrow_forwardA company owns land and a building that houses its manufacturing operations. When the company purchased the manufacturing facility 10 years ago, the purchase price allocated to the land account was $120,000. The manufacturing facility is located in an area that was once the site of many factories. The owners of many of the neighboring factories have recently sold their facilities to residential real estate developers. The company's land is also suitable for residential development. The estimated current value of the land as part of the manufacturing facility is $150,000. The estimated current value of the land as an undeveloped investment is $130,000, and the current value of the land as part of a residential development would be $180,000. What is the fair value of the land? O $130,000 O $150,000 O $120,000 O $180,000arrow_forward
- Farley Corporation purchased land adjacent to its plant to improve access for trucks making deliveries. Expenditures incurred in purchasing the land were as follows: purchase price, $70,000; broker's fees, $6,000; title search and other fees, $5,000; demolition of an old building on the property, $5,700; grading $1,200; digging foundation for the road, $3,000; laying and paving driveway. $25,000; lighting $7,500; signs, $1,500. List the items and amounts that should be included in the Land account. $ $arrow_forwardPina Colada Corp. purchased land adjacent to its plant to improve access for trucks making deliveries. Expenditures incurred in purchasing the land were as follows: purchase price, $56,400; broker's fees, $6,440; title search and other fees, $5,440; demolition of an old building on the property, $6,120; grading, $1,600; digging foundation for the road, $3,350; laying and paving driveway, $27,200 lighting $7,550; signs, $1,680. List the items and amounts that should be included in the Land account. $ 24arrow_forward[The following information applies to the questions displayed below.] Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device. Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Exercise 7-7 (Algo) Part 1 $ 3,600,000 1,120,000. 560,000 360,000 76,000 36,000 $ 5,752,000 Required: 1. How much should Satellite Systems capitalize in the Patent account in the balance sheet? Patent costs capitalizedarrow_forward
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