Allocate payments and receipts to fixed asset accounts The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk. Instructions Determine the increases to Land, Lind Improvements. and Building.

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Answer 1

Textbook Question

Chapter 7, Problem 7.1.2P

Allocate payments and receipts to fixed asset accounts

The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk.

Chapter 7, Problem 7.1.2P, Allocate payments and receipts to fixed asset accounts The following payments and receipts are

Instructions

Determine the increases to Land, Lind Improvements. and Building.

Expert Solution & Answer

To determine

Concept Introduction:

Capital Expenditures are that type of expenses which a company incurs on its tangible or fixed assets in regard to either its purchase or for its repairs or installation. These assets are those which are used for more than one year i.e. which are not held for sale. These expenditures are like purchase of land, building, equipment, repairs or improvement in the building or machinery, etc. These expenses are meant for capitalization in the balance sheet in the respective fixed assets.

The net increase in the value of land, land improvement, and building

Answer to Problem 7.1.2P

The increase in the value of land, land improvement, and building is $473,500, $37,000, and $876,250 respectively.

Explanation of Solution

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
a.	Architect and engineer fees			80,000
b.	Cost of filing and grading land	30,000
c.	Cost of removing the building	10,000
d.	Cost of paving parking lot		25,000
e.	Cost of real estate acquired as plant site	400,000
f.	Cost of repairing windstorm damage				5,000
g.	Cost of repairing vandalism damage				1,800
h.	Cost of trees and shrubbery		12,000
i.	Delinquent real estate taxes on property	20,000
j.	Fee paid to attorney for title	3,000
k.	Finder's fee paid to real estate agency	4,000
l.	Interest incurred on building loan			40,000
m.	Money borrowed to pay building contractor				(775,000)
n.	Payment to contractor for new building			750,000
o.	Proceeds from insurance windstorm and vandalism				(3,600)
p.	Premium on one-year insurance policy			7,500
q.	Proceeds from sale of salvage materials	(4,000)
r.	Refund of premium on insurance policy in (p.)			(1,250)
s.	Special assessment paid to city for extension of water	10,500
	Total	473,500	37,000	876,250	(771,800)

As per the assignment transactions, the net increase in the values of land, land improvement, and building are:

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
	Total	473,500	37,000	876,250	(771,800)

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JH, Inc., is a calendar year, accrual basis corporation with Joe as its sole shareholder (basis in his stock is $90,000). On January 1 of the current year, JH Corporation has accumulated E & P of $200,000. Before considering the effect of the distribution described below, the corporation’s current E & P is $50,000. On November 1, JH distributes an office building to Joe. The office building has an adjusted basis of $80,000 (fair market value of $100,000) and is subject to a mortgage of $110,000. Assume that the building has been depreciated using the ADS method for both income tax and E & P purposes. What are the tax consequences of the distribution to JH and to Joe? (In your answer, be sure to describe the effects on taxable income for both JH and Joe, the impact of the distribution on JH’s E & P, and Joe’s basis in the building.)

Joe is the sole shareholder of JH Corporation. Joe sold his stock to Ethan on October 31 for $150,000. Joe’s basis in JH stock was $50,000 at the start of the year. JH distributed land to Joe immediately before the sale. JH’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Ethan received a $75,000 cash distribution from JH. During the year, JH has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true? a. Joe recognizes a $110,000 gain on the sale of his stock. b. Joe recognizes a $100,000 gain on the sale of his stock. c. Ethan receives $5,000 of dividend income.d. Joe receives $20,000 of dividend income. e. None of the above.

Answer 2

Textbook Question

Chapter 7, Problem 7.1.2P

Allocate payments and receipts to fixed asset accounts

The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk.

Chapter 7, Problem 7.1.2P, Allocate payments and receipts to fixed asset accounts The following payments and receipts are

Instructions

Determine the increases to Land, Lind Improvements. and Building.

Expert Solution & Answer

To determine

Concept Introduction:

Capital Expenditures are that type of expenses which a company incurs on its tangible or fixed assets in regard to either its purchase or for its repairs or installation. These assets are those which are used for more than one year i.e. which are not held for sale. These expenditures are like purchase of land, building, equipment, repairs or improvement in the building or machinery, etc. These expenses are meant for capitalization in the balance sheet in the respective fixed assets.

The net increase in the value of land, land improvement, and building

Answer to Problem 7.1.2P

The increase in the value of land, land improvement, and building is $473,500, $37,000, and $876,250 respectively.

Explanation of Solution

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
a.	Architect and engineer fees			80,000
b.	Cost of filing and grading land	30,000
c.	Cost of removing the building	10,000
d.	Cost of paving parking lot		25,000
e.	Cost of real estate acquired as plant site	400,000
f.	Cost of repairing windstorm damage				5,000
g.	Cost of repairing vandalism damage				1,800
h.	Cost of trees and shrubbery		12,000
i.	Delinquent real estate taxes on property	20,000
j.	Fee paid to attorney for title	3,000
k.	Finder's fee paid to real estate agency	4,000
l.	Interest incurred on building loan			40,000
m.	Money borrowed to pay building contractor				(775,000)
n.	Payment to contractor for new building			750,000
o.	Proceeds from insurance windstorm and vandalism				(3,600)
p.	Premium on one-year insurance policy			7,500
q.	Proceeds from sale of salvage materials	(4,000)
r.	Refund of premium on insurance policy in (p.)			(1,250)
s.	Special assessment paid to city for extension of water	10,500
	Total	473,500	37,000	876,250	(771,800)

As per the assignment transactions, the net increase in the values of land, land improvement, and building are:

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
	Total	473,500	37,000	876,250	(771,800)

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Answer 3

Textbook Question

Chapter 7, Problem 7.1.2P

Allocate payments and receipts to fixed asset accounts

The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk.

Chapter 7, Problem 7.1.2P, Allocate payments and receipts to fixed asset accounts The following payments and receipts are

Instructions

Determine the increases to Land, Lind Improvements. and Building.

Expert Solution & Answer

To determine

Concept Introduction:

Capital Expenditures are that type of expenses which a company incurs on its tangible or fixed assets in regard to either its purchase or for its repairs or installation. These assets are those which are used for more than one year i.e. which are not held for sale. These expenditures are like purchase of land, building, equipment, repairs or improvement in the building or machinery, etc. These expenses are meant for capitalization in the balance sheet in the respective fixed assets.

The net increase in the value of land, land improvement, and building

Answer to Problem 7.1.2P

The increase in the value of land, land improvement, and building is $473,500, $37,000, and $876,250 respectively.

Explanation of Solution

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
a.	Architect and engineer fees			80,000
b.	Cost of filing and grading land	30,000
c.	Cost of removing the building	10,000
d.	Cost of paving parking lot		25,000
e.	Cost of real estate acquired as plant site	400,000
f.	Cost of repairing windstorm damage				5,000
g.	Cost of repairing vandalism damage				1,800
h.	Cost of trees and shrubbery		12,000
i.	Delinquent real estate taxes on property	20,000
j.	Fee paid to attorney for title	3,000
k.	Finder's fee paid to real estate agency	4,000
l.	Interest incurred on building loan			40,000
m.	Money borrowed to pay building contractor				(775,000)
n.	Payment to contractor for new building			750,000
o.	Proceeds from insurance windstorm and vandalism				(3,600)
p.	Premium on one-year insurance policy			7,500
q.	Proceeds from sale of salvage materials	(4,000)
r.	Refund of premium on insurance policy in (p.)			(1,250)
s.	Special assessment paid to city for extension of water	10,500
	Total	473,500	37,000	876,250	(771,800)

As per the assignment transactions, the net increase in the values of land, land improvement, and building are:

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
	Total	473,500	37,000	876,250	(771,800)

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Answer 4

Textbook Question

Chapter 7, Problem 7.1.2P

Allocate payments and receipts to fixed asset accounts

The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale apparel business. The receipts are identified by an asterisk.

Chapter 7, Problem 7.1.2P, Allocate payments and receipts to fixed asset accounts The following payments and receipts are

Instructions

Determine the increases to Land, Lind Improvements. and Building.

Expert Solution & Answer

To determine

Concept Introduction:

Capital Expenditures are that type of expenses which a company incurs on its tangible or fixed assets in regard to either its purchase or for its repairs or installation. These assets are those which are used for more than one year i.e. which are not held for sale. These expenditures are like purchase of land, building, equipment, repairs or improvement in the building or machinery, etc. These expenses are meant for capitalization in the balance sheet in the respective fixed assets.

The net increase in the value of land, land improvement, and building

Answer to Problem 7.1.2P

The increase in the value of land, land improvement, and building is $473,500, $37,000, and $876,250 respectively.

Explanation of Solution

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
a.	Architect and engineer fees			80,000
b.	Cost of filing and grading land	30,000
c.	Cost of removing the building	10,000
d.	Cost of paving parking lot		25,000
e.	Cost of real estate acquired as plant site	400,000
f.	Cost of repairing windstorm damage				5,000
g.	Cost of repairing vandalism damage				1,800
h.	Cost of trees and shrubbery		12,000
i.	Delinquent real estate taxes on property	20,000
j.	Fee paid to attorney for title	3,000
k.	Finder's fee paid to real estate agency	4,000
l.	Interest incurred on building loan			40,000
m.	Money borrowed to pay building contractor				(775,000)
n.	Payment to contractor for new building			750,000
o.	Proceeds from insurance windstorm and vandalism				(3,600)
p.	Premium on one-year insurance policy			7,500
q.	Proceeds from sale of salvage materials	(4,000)
r.	Refund of premium on insurance policy in (p.)			(1,250)
s.	Special assessment paid to city for extension of water	10,500
	Total	473,500	37,000	876,250	(771,800)

As per the assignment transactions, the net increase in the values of land, land improvement, and building are:

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
	Total	473,500	37,000	876,250	(771,800)

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Concept Introduction:

Capital Expenditures are that type of expenses which a company incurs on its tangible or fixed assets in regard to either its purchase or for its repairs or installation. These assets are those which are used for more than one year i.e. which are not held for sale. These expenditures are like purchase of land, building, equipment, repairs or improvement in the building or machinery, etc. These expenses are meant for capitalization in the balance sheet in the respective fixed assets.

The net increase in the value of land, land improvement, and building

Answer to Problem 7.1.2P

The increase in the value of land, land improvement, and building is $473,500, $37,000, and $876,250 respectively.

Explanation of Solution

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
a.	Architect and engineer fees			80,000
b.	Cost of filing and grading land	30,000
c.	Cost of removing the building	10,000
d.	Cost of paving parking lot		25,000
e.	Cost of real estate acquired as plant site	400,000
f.	Cost of repairing windstorm damage				5,000
g.	Cost of repairing vandalism damage				1,800
h.	Cost of trees and shrubbery		12,000
i.	Delinquent real estate taxes on property	20,000
j.	Fee paid to attorney for title	3,000
k.	Finder's fee paid to real estate agency	4,000
l.	Interest incurred on building loan			40,000
m.	Money borrowed to pay building contractor				(775,000)
n.	Payment to contractor for new building			750,000
o.	Proceeds from insurance windstorm and vandalism				(3,600)
p.	Premium on one-year insurance policy			7,500
q.	Proceeds from sale of salvage materials	(4,000)
r.	Refund of premium on insurance policy in (p.)			(1,250)
s.	Special assessment paid to city for extension of water	10,500
	Total	473,500	37,000	876,250	(771,800)

As per the assignment transactions, the net increase in the values of land, land improvement, and building are:

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
	Total	473,500	37,000	876,250	(771,800)

Answer 8

Expert Solution & Answer

To determine

Concept Introduction:

Capital Expenditures are that type of expenses which a company incurs on its tangible or fixed assets in regard to either its purchase or for its repairs or installation. These assets are those which are used for more than one year i.e. which are not held for sale. These expenditures are like purchase of land, building, equipment, repairs or improvement in the building or machinery, etc. These expenses are meant for capitalization in the balance sheet in the respective fixed assets.

The net increase in the value of land, land improvement, and building

Answer to Problem 7.1.2P

The increase in the value of land, land improvement, and building is $473,500, $37,000, and $876,250 respectively.

Explanation of Solution

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
a.	Architect and engineer fees			80,000
b.	Cost of filing and grading land	30,000
c.	Cost of removing the building	10,000
d.	Cost of paving parking lot		25,000
e.	Cost of real estate acquired as plant site	400,000
f.	Cost of repairing windstorm damage				5,000
g.	Cost of repairing vandalism damage				1,800
h.	Cost of trees and shrubbery		12,000
i.	Delinquent real estate taxes on property	20,000
j.	Fee paid to attorney for title	3,000
k.	Finder's fee paid to real estate agency	4,000
l.	Interest incurred on building loan			40,000
m.	Money borrowed to pay building contractor				(775,000)
n.	Payment to contractor for new building			750,000
o.	Proceeds from insurance windstorm and vandalism				(3,600)
p.	Premium on one-year insurance policy			7,500
q.	Proceeds from sale of salvage materials	(4,000)
r.	Refund of premium on insurance policy in (p.)			(1,250)
s.	Special assessment paid to city for extension of water	10,500
	Total	473,500	37,000	876,250	(771,800)

As per the assignment transactions, the net increase in the values of land, land improvement, and building are:

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
	Total	473,500	37,000	876,250	(771,800)

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Concept Introduction:

Capital Expenditures are that type of expenses which a company incurs on its tangible or fixed assets in regard to either its purchase or for its repairs or installation. These assets are those which are used for more than one year i.e. which are not held for sale. These expenditures are like purchase of land, building, equipment, repairs or improvement in the building or machinery, etc. These expenses are meant for capitalization in the balance sheet in the respective fixed assets.

The net increase in the value of land, land improvement, and building

Answer 12

Answer to Problem 7.1.2P

The increase in the value of land, land improvement, and building is $473,500, $37,000, and $876,250 respectively.

Answer 13

Explanation of Solution

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
a.	Architect and engineer fees			80,000
b.	Cost of filing and grading land	30,000
c.	Cost of removing the building	10,000
d.	Cost of paving parking lot		25,000
e.	Cost of real estate acquired as plant site	400,000
f.	Cost of repairing windstorm damage				5,000
g.	Cost of repairing vandalism damage				1,800
h.	Cost of trees and shrubbery		12,000
i.	Delinquent real estate taxes on property	20,000
j.	Fee paid to attorney for title	3,000
k.	Finder's fee paid to real estate agency	4,000
l.	Interest incurred on building loan			40,000
m.	Money borrowed to pay building contractor				(775,000)
n.	Payment to contractor for new building			750,000
o.	Proceeds from insurance windstorm and vandalism				(3,600)
p.	Premium on one-year insurance policy			7,500
q.	Proceeds from sale of salvage materials	(4,000)
r.	Refund of premium on insurance policy in (p.)			(1,250)
s.	Special assessment paid to city for extension of water	10,500
	Total	473,500	37,000	876,250	(771,800)

As per the assignment transactions, the net increase in the values of land, land improvement, and building are:

Transaction no.	Transaction	Land ($)	Land improvements ($)	Buildings ($)	Other accounts ($)
	Total	473,500	37,000	876,250	(771,800)

Answer 14

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