Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. the following expenditures are related to land, la

The following expenditures are related to land, land improvements and buildings, which were acquired on November...

Free

90.2K

Verified Solution

Question

Accounting

The following expenditures are related to land, landimprovements and buildings, which were acquired on November 1,2015.

Cost of real estate acquired for a new manufacturing plantS365,000 (the land is appraised for $262,800 and the building for$102,200)

Real estate taxes paid by the purchaser......$20,000

Cost of removing a barn..... $8,500

Architect's fees for updating the building..... $6750

Attorneys fees for closing the sale..... $12500

Grading land.... $3500

paving parking lot......$7000

Planting trees and shrubs.......$9250

Cost of repairs to building due to storm duringconstruction..... $1300

lights placed on driveway .... $750

fee to real estate broker..... $2500

a) determine the cost of the land, the building and theimprovements (round to nearest dollar)

b)prepare journal entries on Dec. 31, 2015 for depreciationassuming the building will have a useful life of 20 years and noresidual value. Use double declining balance method and thehalf-year convention. Depreciate the land improvements usingstraight line method, a 5 year life, to the nearest month with zeroresidual value (to the nearest dollar).

Answer & Explanation Solved by verified expert
4.2 Ratings (797 Votes)

a) determination of the costs:
Cost head land building land improvement Total
Cost of real estate 262800 102200 365000 (ratio=2.57:1)
Real estate taxes 14398 5602 20000 (ratio=2.57:1)
Barn removing cost 8500 8500
Building architect's fees 6750 6750
Attorneys fees 8999 3501 12500 (ratio=2.57:1)
Grading land 3500 3500
paving parking lot 7000 7000
Planting trees and shrubs 9250 9250
Building repairs 1300 1300
Driveway lights 750 750
Estate broker fee 1800 700                                       2500 (ratio=2.57:1)
Total 287996 127054 22000 437050
b) Journal Entries:
Date Acc. Titles Debit $ Credit $
31-Dec-15 Depreciation - Building 2118 (127054*5%*2*2/12)
Depreciation - Land Development 733 (22000*20%*2/12)
Accum. Depreciation - Building 2118
Accum. Depreciation - Land Development 733
(depreciation expense recorded on building & Development)

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Accounting
1.2K views

The following data is used for questions 1-5. Martin, Inc., is a manufacturer of quality headphones....

Advance Math
1.2K views

How do you use mathmatical induction to show that the coefficient of x^2 in the expansion...

Psychology
1.2K views

BYZANTIUM What was The City of God? What did Augustine want to accomplish with The City of...

Operations Management
1.2K views

Answer in paragraph form: Strategic entrepreneurship, and the innovations that follow, is recognized as an extremely important...

Physics
1.2K views

A concave mirror of focal length f is placed at a distance of d from...

Geometry
1.2K views

an a n 1 d an 0 7 1 Sn a a to 13 terms...

Calculus
1.2K views

Consider the following function Step 2 of 2 Find the length of the individual line...

Accounting
1.2K views

What is an advantage of using the FIFO inventory cost flow assumption? a. In periods...

Accounting
1.2K views

You are delivering a presentation, and the subject matter concerns whether a company should report...

Finance
1.2K views

The bonds issued by United Corp. bear a coupon of 4 percent, payable semiannually. The...

Finance
1.2K views

11. More on the corporate valuation model Praxis Corp. is expected to generate a free...

Finance
1.2K views

Five years ago a borrower incurred a mortgage for $80,000 at 10% for 30 years,...