Cornerstones of Financial Accounting
4th Edition
ISBN: 9781337690881
Author: Jay Rich, Jeff Jones
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 17CE
To determine
Cost of a Fixed Asset:
Cost of a Fixed Asset is the cost incurred on acquiring the Fixed asset and includes any expenditure which is necessary in preparing the asset for its use.
To calculate:
To determine the cost of Land.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Merchant Company purchased property for a building site. The costs associated with the property were:
Purchase price
Real estate commissions
Legal fees
Expenses of clearing the land
Expenses to remove old building
What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?
Multiple Choice
$181,300 to Land; $20,800 to Building.
$196,800 to Land; $1,500 to Building.
$195,500 to Land; $5,300 to Building.
$199,300 to Land; $0 to Building.
$ 180,000
15,500
1,300
2,500
1,500
$200,800 to Land; $0 to Building.
Merchant Company purchased property for a building site. The costs associated with the property were:
Purchase price
$ 191,000
Real estate commissions
16,600
Legal fees
2,400
Expenses of clearing the land
Expenses to remove old building
3,600
2,600
What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?
17.
Cost of a Tangible Capital Asset
Borges Ltd. recently purchased land to use for the construction of its new manufacturing facility and incurred the following costs: purchase price, $85,000; real estate commissions, $5,100; delinquent property taxes, $1,500; closing costs, $3,500; clearing and grading of the land, $8,100.
Required:
Determine the cost of the land.
Chapter 7 Solutions
Cornerstones of Financial Accounting
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - How does the cost concept affect accounting for...Ch. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - What factors must be known or estimated in order...Ch. 7 - How do the accelerated and straight-line...Ch. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 1MCQCh. 7 - Prob. 2MCQCh. 7 - When depreciation is recorded each period, what...Ch. 7 - Prob. 4MCQCh. 7 - Refer to the information for Cox Inc. above. What...Ch. 7 - Refer to the information for Cox Inc. above. What...Ch. 7 - Which of the following statements is true...Ch. 7 - Normal repair and maintenance of an asset is an...Ch. 7 - Chapman Inc. purchased a piece of equipment in...Ch. 7 - Bradley Company purchased a machine for $34,000 on...Ch. 7 - Prob. 11MCQCh. 7 - Which of the following statements is true? a. The...Ch. 7 - Prob. 13MCQCh. 7 - Heston Company acquired a patent on January 1,...Ch. 7 - Prob. 15MCQCh. 7 - ( Appendix 7 A) Murnane Company purchased a...Ch. 7 - Prob. 17CECh. 7 - Prob. 18CECh. 7 - Straight-Line Depreciation Refer to the...Ch. 7 - Prob. 20CECh. 7 - Prob. 21CECh. 7 - Revision of Depreciation On January 1, 2017, Slade...Ch. 7 - Disposal of an Operating Asset On August 30,...Ch. 7 - Prob. 24CECh. 7 - Cost of Intangible Assets Advanced Technological...Ch. 7 - Prob. 26CECh. 7 - Prob. 27CECh. 7 - (Appendix 7A) Impairment Brown Industries had two...Ch. 7 - Prob. 29BECh. 7 - Acquisition Cost Desert State University installed...Ch. 7 - Depreciation Concepts Listed below are concepts...Ch. 7 - Depreciation Methods On January 1, 2019, Loeffler...Ch. 7 - Expenditures After Acquisition Listed below are...Ch. 7 - Revision of Depreciation On January 1, 2019, the...Ch. 7 - Disposal of an Operating Asset Jolie Company owns...Ch. 7 - Analyzing Fixed Assets Pitt reported the following...Ch. 7 - Prob. 37BECh. 7 - Prob. 38BECh. 7 - ( Appendix 7A) Impairment Listed below is...Ch. 7 - Prob. 40ECh. 7 - Prob. 41ECh. 7 - Prob. 42ECh. 7 - Prob. 43ECh. 7 - Cost of a Fixed Asset Colson Photography Service...Ch. 7 - Prob. 45ECh. 7 - Cost and Depreciation On January 1, 2019, Quick...Ch. 7 - Characteristics of Depreciation Methods Below is a...Ch. 7 - Prob. 48ECh. 7 - Depreciation Methods Clearcopy, a printing...Ch. 7 - Depreciation Methods Quick-as-Lightning, a...Ch. 7 - Inferring Original Cost Barton Construction...Ch. 7 - Choice Among Depreciation Methods Walnut Ridge...Ch. 7 - Revision of Depreciation On January 1, 2017,...Ch. 7 - Capital versus Revenue Expenditure Warrick Water...Ch. 7 - Expenditures After Acquisition The following...Ch. 7 - Expenditures After Acquisition Roanoke...Ch. 7 - Prob. 57ECh. 7 - Prob. 58ECh. 7 - Disposal of Fixed Asset Pacifica Manufacturing...Ch. 7 - Prob. 60ECh. 7 - Prob. 61ECh. 7 - Prob. 62ECh. 7 - Balance Sheet Presentation The following...Ch. 7 - Prob. 64ECh. 7 - Prob. 65ECh. 7 - Prob. 66ECh. 7 - Prob. 67ECh. 7 - Financial Statement Presentation of Operating...Ch. 7 - A Cost of a Fixed Asset Mist City Car Wash...Ch. 7 - Depreciation Methods Hansen Supermarkets purchased...Ch. 7 - Depreciation Schedules Wendt Corporation acquired...Ch. 7 - Expenditures After Acquisition Pasta, a restaurant...Ch. 7 - Prob. 73APSACh. 7 - Prob. 74APSACh. 7 - Prob. 75APSACh. 7 - Prob. 76APSACh. 7 - Prob. 68BPSBCh. 7 - Cost of a Fixed Asset Metropolis Country Club...Ch. 7 - Depreciation Methods Graphic Design Inc. purchased...Ch. 7 - Depreciation Schedules Dunn Corporation acquired a...Ch. 7 - Prob. 72BPSBCh. 7 - Prob. 73BPSBCh. 7 - Prob. 74BPSBCh. 7 - Prob. 75BPSBCh. 7 - Prob. 76BPSBCh. 7 - Prob. 77.1CCh. 7 - Prob. 77.2CCh. 7 - Prob. 78.1CCh. 7 - Prob. 78.2CCh. 7 - Prob. 79.1CCh. 7 - Prob. 79.2CCh. 7 - Prob. 79.3CCh. 7 - Prob. 80.1CCh. 7 - Prob. 80.2CCh. 7 - Prob. 80.3CCh. 7 - Prob. 80.4CCh. 7 - Prob. 80.5CCh. 7 - Prob. 80.6CCh. 7 - Prob. 80.7CCh. 7 - Prob. 80.8CCh. 7 - Comparative Analysis: Under Armour, Inc., versus...Ch. 7 - Prob. 81.2CCh. 7 - Comparative Analysis: Under Armour, Inc., versus...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...Ch. 7 - CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT After...
Knowledge Booster
Similar questions
- Costs to Be Included in Historical Cost Valuation. At a cost of 200,000, Assume In-N-Out Burger acquired a tract of land for a restaurant site. It paid attorneys 7,500 to conduct a title search and to prepare the required legal documents for the purchase. State real estate transfer taxes totaled 2,500. Building permits totaled 1,200. Compute the acquisition cost of the land.arrow_forwardA company purchased property for a building site. The costs associated with the property were: Purchase price $175,000 Real estate commissions 15,000 Legal fees. Expenses of clearing the land Expenses to remove old building 800 2,000 1,000 What portion of these costs should be allocated to the cost of the land and what portion should be alloca the cost of the new building? $175,800 to Land; $18,800 to Building O $190,000 to Land; $3,800 to Building $190,800 to Land; $1,000 to Building O $192,800 to Land; $0 to Building O $193,800 to Land; $0 to Buildingarrow_forwardInvestment Property Determine the cost of the following items of investment acquired by Sasha Corporation during 2022; Land site for capital appreciation was acquired for P8,600,000. The company paid P430,000 commission to a real estate agent. Costs of P 135,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for P 65,000. The cost of investment property is _____________ Land and building were acquired to be held for under operating leases. The company made a de payment of P4,000,000, issued 20,000 P200 par ordinary shares with a market price of P240 per share, and issued a three-year non-interest-bearing note for P6,000.000 note is payable in equal annual installments of P2,000,000 at the end of each year from the date of purchase. The prevailing interest rate for similar notes is 10%. 30% of the purchase price is allocated to the land. Investment property is recorded at __________arrow_forward
- Using the Cost Approach to property appraisal, determine the final appraised value of a building and the land the bulding is on based upon the following: - Land Value-$6 million; > Building Cost (psf) - $250; > Total area (psf)-$100,000: > Developer's profit - S800,000; > Economic obsolescence - S1.5 million; > Functional obsolescence - $3 million; > Locational obsolescence - $2 million; > Curable depreciation - Si million; > Effective age -20 years: > Economic Age- 50 years. Oa $10.340,000 Ob.S14,380,000 OC S13,980.000 Od. 510,380,000 Oe. $8,380,000arrow_forwardFacetious Company incurred the following expenditures related to the construction of a new home office: Purchase price of land and an old apartment building 2,000,000 Fair value of land 1,800,000 Legal fees, including fee for title search 10,000 Payment of land mortgage and related interest due at time of sale 50,000 Payment of delinquent property taxes assumed 20,000 Cost of razing the apartment building 30,000 Grading and drainage on land site 15,000 Architect fee on new building 200,000 Payment to building contractor 8,000,000 Interest cost on specific borrowing during construction 300,000 Payment of medical bills of employees accidentally injured while inspecting building construction 10,000 Cost of paving driveway and parking lot 40,000 Cost of trees, shrubs and other landscaping 55,000 Cost of installing lights in parking lot 5,000 Premium for insurance on building during construction 25,000 Cost of open house party to celebrate opening of building 60,000 1. What is the cost…arrow_forwardDetermining the Cost of an AssetOmar Corporation paid $200,000 for a tract of land that had an old gas station on it. The gas station was demolished at a cost of $20,000 and a new warehouse was constructed on the site at a cost of $550,000. In addition, several other costs were incurred: Legal fees (associated with the purchase of the land) $35,000 Architect fees (associated with the new warehouse) $42,000 Interest on the construction loan (for the new warehouse) $18,000 (a) What value should be assigned to the tract of land? $Answer (b) What value should be assigned to the new warehouse? $Answerarrow_forward
- COMPASSION Company incurred the following costs at the beginning of the current year: Cost of land 1,000,000 Cost of building 4,000,000 Remodeling and repairs prior to occupancy 500,000 Escrow fee 100,000 Clearing, leveling and landfill 250,000 Property tax for period after the acquisition 150,000 Real estate commission 300,000 Required: Compute the cost of building Compute the cost of landarrow_forwardDetermining the Cost of an AssetOmar Corporation paid $300,000 for a tract of land that had an old gas station on it. The gas station was demolished at a cost of $20,000 and a new warehouse was constructed on the site at a cost of $550,000. In addition, several other costs were incurred: Legal fees (associated with the purchase of the land) $45,000 Architect fees (associated with the new warehouse) $50,000 Interest on the construction loan (for the new warehouse) $24,000 What value should be assigned to the tract of land? $Answer What value should be assigned to the new warehouse? $Answerarrow_forwardAcquisition Cost of Long-Lived Assets The following items represent expenditures (or receipts) related to the construction of a new home office for Norma Company. Cost of land site (which included an old apartment building appraised at 75,000). Legal fees, including fee for title search Payment of apartment building mortgage and related interest due at time of sale Payment for delinquent property taxes assumed by the purchaser Cost of razing the apartment building Proceeds from sale of salvaged materials Grading to establish proper drainage flow on land site Architect's fees on new building Proceeds from sales of excess dirt (from basement excavation) to owner of adjoining property (dirt was used to fill in a low area on property) Payment to building contractor Payment of medical bills of employee accidentally injured while inspecting building construction Special assessment for paving city sidewalks (paid to city) Cost of paving driveway and parking lot Cost of installing lights in…arrow_forward
- Determine the cost of the following items of investment acquired by Sasha Corporation during 2022;a. Land site for capital appreciation was acquired for P8,600,000. The company paid P 430,000 commission to a real estate agent. Costs of P 135,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for P 65,000. The cost of investment property is _____________b. Land and building were acquired to be held for under operating leases. The company made a de payment of P4,000,000, issued 20,000 P200 par ordinary shares with market price of P240 per share and issued three year non-interest bearing note for P6,000.000 note is payable in equal annual instalments of P2,000,000 at the end of each year from the date of purchase. Prevailing interest rate for similar notes is 10%. 30% of the purchase price is allocated to the land. Investment property is recorded at __________arrow_forwardWhat is the cost of the land, based upon the following data? Land purchase price $184,675 Broker's commission 18,496 Payment for the demolition and removal of existing building 4,906 Cash received from the sale of materials salvaged from the demolished building 2,414 $arrow_forwardColumbia Company incurred the following expenditures related to the land and building: Payment for land and old building 1,750,000 Demolition of old building to prepare the land for the construction of a new building 87,500 Payment to tenants for vacating old building 26,250 Building permit for new construction 52,500 Surveying fee before construction of new building 35,000 Parking lots and driveways (part of building plan) 70,000 Cost of grading, leveling and landfill 78,750 Assessment by city for drainage project 8,750 Construction costs of new building 10,500,000 Temporary quarters for…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning