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Corporate Financial Accounting
14th Edition
ISBN: 9781305887510
Author: WARREN
Publisher: Cengage
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Textbook Question
Chapter 9, Problem 9.1BPR
Allocating 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.
A. | Fee paid to attorney for title search............................................ | $ 3,600 |
B. | Cost of real estate acquired as a plant site: Land................................ | 720,000 |
Building (to be demolished)........... | 60,000 | |
C. | Finder's fee paid to real estate agency.......................................... | 23,400 |
D. | Delinquent real estate taxes on property, assumed by purchaser................. | 15,000 |
E. | Architect's and engineer's fees for plans for new building....................... | 75,000 |
F. | Cost of removing building purchased with land in (B)............................ | 10,000 |
G. | Proceeds from sale of salvage materials from old building....................... | 3,400* |
H. | Cost of filling and grading land................................................ | 18,000 |
1. | Premium on one-year insurance policy during construction...................... | 8,400 |
J. | Money borrowed to pay building contractor.................................... | 800,000* |
K. | Special assessment paid to city for extension of water main to the property....... | 13,400 |
L. | Cost of repairing windstorm damage during construction....................... | 3,000 |
M. | Cost of repairing vandalism damage during construction........................ | 2,000 |
N. | Cost of trees and shrubbery planted........................................... | 14,000 |
0. | Cost of paving parking lot to be used by customers............................. | 21,600 |
P. | Interest incurred on building loan during construction.......................... | 40,000 |
Q. | Proceeds from insurance company for windstorm and vandalism damage........ | 4,500* |
R. | Payment to building contractor for new building................................ | 800,000 |
S. | Refund of premium on insurance policy (1) canceled after 10 months............. | 1,400* |
Instructions
- 1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Indicate receipts by an asterisk. Identify each item by letter and list the amounts in columnar form, as follows:
Item | Land | Land Improvements | Building | Other Accounts |
- 2. Determine the amount debited to Land. Land Improvements, and Building.
- 3. The costs assigned to the land, which is used as a plant site, will not be
depreciated , while the costs assigned to land improvements will be depreciated. Explain this seemingly contradictory application of the concept of depreciation. - 4. What would be the effect on the income statement and
balance sheet if the cost of paving the parking lot of $21,600 [payment (0)] was incorrectly classified as Land rather than Land Improvements? Assume Land Improvements are depreciated over a 10-year life using the double-declining-balance method.
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Chapter 9 Solutions
Corporate Financial Accounting
Ch. 9 - ONeil Office Supplies has a fleet of automobiles...Ch. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Distinguish between the accounting for capital...Ch. 9 - Immediately after a used truck is acquired, a new...Ch. 9 - Keyser Company purchased a machine that has a...Ch. 9 - Is it necessary for a business to use the same...Ch. 9 - A. Under what conditions is the use of an...Ch. 9 - For some of the fixed assets of a business, the...Ch. 9 - Prob. 10DQ
Ch. 9 - Straight-line depreciation A building acquired at...Ch. 9 - Units-of-activity depreciation A truck acquired at...Ch. 9 - Double-declining-balance depreciation A building...Ch. 9 - Revision of depreciation Equipment with a cost of...Ch. 9 - Capital and revenue expenditures On February 14,...Ch. 9 - Sale of equipment Equipment was acquired at the...Ch. 9 - Prob. 9.7BECh. 9 - Prob. 9.8BECh. 9 - Costs of acquiring fixed assets Melinda Staffers...Ch. 9 - Prob. 9.2EXCh. 9 - Prob. 9.3EXCh. 9 - Prob. 9.4EXCh. 9 - Straight-line depreciation rates Convert each of...Ch. 9 - Straight-line depreciation A refrigerator used by...Ch. 9 - Depreciation by units-of-activity method A...Ch. 9 - Depreciation by units-of-activity method Prior to...Ch. 9 - Depreciation by two methods A Kubota tractor...Ch. 9 - Depreciation by two methods A storage tank...Ch. 9 - Partial-year depreciation Equipment acquired at a...Ch. 9 - Prob. 9.12EXCh. 9 - Capital and revenue expenditures Warner Freight...Ch. 9 - Prob. 9.14EXCh. 9 - Capital and revenue expenditures Quality Move...Ch. 9 - Capital expenditure and depreciation Willow Creek...Ch. 9 - Entries for sale of fixed asset Equipment acquired...Ch. 9 - Disposal of fixed asset Equipment acquired on...Ch. 9 - Prob. 9.19EXCh. 9 - Amortization entries Kleen Company acquired patent...Ch. 9 - Prob. 9.21EXCh. 9 - Balance sheet presentation List the errors you...Ch. 9 - Asset traded for similar asset A printing press...Ch. 9 - Prob. 9.24EXCh. 9 - Entries for trade of fixed asset On July 1, Twin...Ch. 9 - Entries for trade of fixed asset On October 1,...Ch. 9 - Prob. 9.1APRCh. 9 - Comparing three depreciation methods Dexter...Ch. 9 - Depreciation by three methods; partial years...Ch. 9 - Depreciation by two methods; sale of fixed asset...Ch. 9 - Prob. 9.5APRCh. 9 - Amortization and depletion entries Data related to...Ch. 9 - Allocating payments and receipts to fixed asset...Ch. 9 - Comparing three depreciation methods Waylander...Ch. 9 - Depreciation by three methods; partial years...Ch. 9 - Depreciation by two methods; sale of fixed asset...Ch. 9 - Transactions for fixed assets, including sale The...Ch. 9 - Amortization and depletion entries Data related to...Ch. 9 - Continuing Company AnalysisAmazon: Fixed asset...Ch. 9 - Prob. 9.2ADMCh. 9 - Prob. 9.3ADMCh. 9 - Comcast, Google, and Walmart: Fixed asset turnover...Ch. 9 - Prob. 9.1TIFCh. 9 - Communication Godwin Co. owns three delivery...
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