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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Question
Chapter 10, Problem 6E
1.
To determine
State the amount at which the Corporation E must record the cost of the land and the new building respectively.
2.
To determine
State the effect on the financial statement. If the management misclassified a portion of the building’s cost as part of the cost of the land.
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Acquisition of Land and Building
On February 1, 2019, Edwards Corporation purchased a parcel of land as a factory site for $120,000. It demolished an old building on the property and began construction on a new building that was completed on October 2, 2019. Costs incurred during this period are:
Demolition of old building
$ 10,000
Architect's fees
20,000
Legal fees for title investigation and purchase contract
4,000
Construction costs
625,000
Edwards sold salvaged materials resulting from the demolition for $2,000.
Required:
1. At what amount should Edwards record the cost of the land and the new building, respectively?
If an input box should be blank, enter a zero.
Land
Building
Purchase price of land
$
$
Demolition of old building
Architect's fees
Legal fees
Construction costs
Salvaged materials
Total
$
$
2. Next Level If management misclassified a portion of the building's cost as part of the cost of…
Acquisition of Land and Building
On February 1, 2019, Edwards Corporation purchased a parcel of land as a factory site for $100,000. It demolished an
old building on the property and began construction on a new building that was completed on October 2, 2019. Costs
incurred during this period are:
Demolition of old building
$ 8,000
Architect's fees
20,000
Legal fees for title investigation and purchase contract 5,000
Construction costs
625,000
Edwards sold salvaged materials resulting from the demolition for $2,000.
Required:
1. At what amount should Edwards record the cost of the land and the new building, respectively?
If an input box should be blank, enter a zero.
Land
Building
Purchase price of land
Demolition of old building
Architect's fees
Legal fees
Construction costs
Salvaged materials
Total
2. Next Level If management misclassified a portion of the building's cost as part of the cost of the land, what would be
the effect on the financial statements?
On March 1, 2021, Beldon Corporation purchased land as a factory site for $71,000. An old building on the property was demolished,
and construction began on a new building that was completed on December 15, 2021. Costs incurred during this period are listed
below:
Demolition of old building
Architect's fees (for new building)
Legal fees for title investigation of land
Property taxes on land (for period beginning March 1, 2021)
Construction costs
Interest on construction loan
Complete this question by entering your answers in the tabs below.
Salvaged materials resulting from the demolition of the old building were sold for $3,100.
Required:
Determine the amounts that Beldon should capitalize as the cost of the land and the new building.
Cost of Land Cost of New
Building
Capitalized cost of land:
$ 9,500
10,000
7,500
4,100
Determine the amounts that Beldon should capitalize as the cost of the land. (Amounts to be deducted should be indicated
with a minus sign.)
Total cost of land
610,000…
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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