At December 31, 2018, certain accounts included in the property, plant, and equipment section of Townsand Company's balance sheet had the following balances: Land $100,000 Buildings 800,000 Leasehold improvements 500,000 Machinery and equipment 700,000 During 2019, the following transactions occurred: Land site number 621 was acquired for $1,000,000. Additionally, to acquire the land, Townsand paid a $60,000 commission to a real estate agent. Costs of $15,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $5,000. A second tract of land (site number 622) with a building was acquired for $300,000. The closing statement indicated that the land value was $200,000 and the building value was $100,000. Shortly after acquisition, the building was demolished at a cost of $30,000. A new building was constructed for $150,000 plus the following costs: Excavation fees $11,000 Architectural design fees 8,000 Building permit fee 1,000 The building was completed and occupied on September 29, 2019. A third tract of land (site number 623) was acquired for $600,000 and was put on the market for resale. Extensive work was done to a building occupied by Townsand under a lease agreement that expires on December 31, 2028. The total cost of the work was $125,000, which consisted of the following: Painting of ceilings $ 10,000 (estimated useful life is 1 year) Electrical work 35,000 (estimated useful life is 10 years) Construction of extension to current working area 80,000 (estimated useful life is 30 years) $125,000 The lessor, Steinbeck Company, paid one-half of the costs incurred in connection with the extension to the current working area. During December 2019, costs of $65,000 were incurred to improve leased office space. The related lease will terminate on December 31, 2021, and is not expected to be renewed. A group of new machines was purchased under a royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was $75,000, freight costs were $2,000, unloading charges were $1,500, and royalty payments for 2019 were $13,000. Required: Prepare a detailed analysis of the changes in the balance sheet accounts-Land, Buildings, Leasehold Improvements, and Machinery and Equipment-for 2019. Disregard the related accumulated depreciation accounts. If a cost should not be allocated to one of the four balance sheet accounts listed, then select the "Other" column. Cost Account Land # 621 purchase price Commission to real estate agent Clearing costs Amounts recovered for timber and gravel Land site #622 purchase price Demolition cost Construction costs Building permit fee Architectural design fees Excavation fees Land site #623 purchase price Painting of ceilings Electrical work Construction of extension Office space work Machine purchase price Freight costs Unloading charges Royalty payments Determine the new ending balance for each of the following accounts: Beginning Balance Ending Balance Land $100,000 $fill in the blank 20 Buildings $800,000 $fill in the blank 21 Leasehold Improvements $500,000 $fill in the blank 22 Machinery and Equipment $700,000 $fill in the blank 23

At December 31, 2018, certain accounts included in the property, plant, and equipment section of Townsand Company's balance sheet had the following balances: Land $100,000 Buildings 800,000 Leasehold improvements 500,000 Machinery and equipment 700,000 During 2019, the following transactions occurred: Land site number 621 was acquired for $1,000,000. Additionally, to acquire the land, Townsand paid a $60,000 commission to a real estate agent. Costs of $15,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $5,000. A second tract of land (site number 622) with a building was acquired for $300,000. The closing statement indicated that the land value was $200,000 and the building value was $100,000. Shortly after acquisition, the building was demolished at a cost of $30,000. A new building was constructed for $150,000 plus the following costs: Excavation fees $11,000 Architectural design fees 8,000 Building permit fee 1,000 The building was completed and occupied on September 29, 2019. A third tract of land (site number 623) was acquired for $600,000 and was put on the market for resale. Extensive work was done to a building occupied by Townsand under a lease agreement that expires on December 31, 2028. The total cost of the work was $125,000, which consisted of the following: Painting of ceilings $ 10,000 (estimated useful life is 1 year) Electrical work 35,000 (estimated useful life is 10 years) Construction of extension to current working area 80,000 (estimated useful life is 30 years) $125,000 The lessor, Steinbeck Company, paid one-half of the costs incurred in connection with the extension to the current working area. During December 2019, costs of $65,000 were incurred to improve leased office space. The related lease will terminate on December 31, 2021, and is not expected to be renewed. A group of new machines was purchased under a royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was $75,000, freight costs were $2,000, unloading charges were $1,500, and royalty payments for 2019 were $13,000. Required: Prepare a detailed analysis of the changes in the balance sheet accounts-Land, Buildings, Leasehold Improvements, and Machinery and Equipment-for 2019. Disregard the related accumulated depreciation accounts. If a cost should not be allocated to one of the four balance sheet accounts listed, then select the "Other" column. Cost Account Land # 621 purchase price Commission to real estate agent Clearing costs Amounts recovered for timber and gravel Land site #622 purchase price Demolition cost Construction costs Building permit fee Architectural design fees Excavation fees Land site #623 purchase price Painting of ceilings Electrical work Construction of extension Office space work Machine purchase price Freight costs Unloading charges Royalty payments Determine the new ending balance for each of the following accounts: Beginning Balance Ending Balance Land $100,000 $fill in the blank 20 Buildings $800,000 $fill in the blank 21 Leasehold Improvements $500,000 $fill in the blank 22 Machinery and Equipment $700,000 $fill in the blank 23

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 8P

See similar textbooks

Related questions

Question

Comprehensive

At December 31, 2018, certain accounts included in the property, plant, and equipment section of Townsand Company's balance sheet had the following balances:

Land		$100,000
Buildings		800,000
Leasehold improvements		500,000
Machinery and equipment		700,000

During 2019, the following transactions occurred:

Land site number 621 was acquired for $1,000,000. Additionally, to acquire the land, Townsand paid a $60,000 commission to a real estate agent. Costs of $15,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $5,000.
A second tract of land (site number 622) with a building was acquired for $300,000. The closing statement indicated that the land value was $200,000 and the building value was $100,000. Shortly after acquisition, the building was demolished at a cost of $30,000. A new building was constructed for $150,000 plus the following costs:

Excavation fees $11,000

Architectural design fees 8,000

Building permit fee 1,000

The building was completed and occupied on September 29, 2019.
A third tract of land (site number 623) was acquired for $600,000 and was put on the market for resale.

Extensive work was done to a building occupied by Townsand under a lease agreement that expires on December 31, 2028. The total cost of the work was $125,000, which consisted of the following:

Painting of ceilings	$ 10,000	(estimated useful life is 1 year)
Electrical work	35,000	(estimated useful life is 10 years)
Construction of extension to current working area	80,000	(estimated useful life is 30 years)
	$125,000

The lessor, Steinbeck Company, paid one-half of the costs incurred in connection with the extension to the current working area.

During December 2019, costs of $65,000 were incurred to improve leased office space. The related lease will terminate on December 31, 2021, and is not expected to be renewed.
A group of new machines was purchased under a royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was $75,000, freight costs were $2,000, unloading charges were $1,500, and royalty payments for 2019 were $13,000.

Required:

Prepare a detailed analysis of the changes in the balance sheet accounts-Land, Buildings, Leasehold Improvements, and Machinery and Equipment-for 2019. Disregard the related accumulated depreciation accounts.

If a cost should not be allocated to one of the four balance sheet accounts listed, then select the "Other" column.

Cost	Account
Land # 621 purchase price
Commission to real estate agent
Clearing costs
Amounts recovered for timber and gravel
Land site #622 purchase price
Demolition cost
Construction costs
Building permit fee
Architectural design fees
Excavation fees
Land site #623 purchase price
Painting of ceilings
Electrical work
Construction of extension
Office space work
Machine purchase price
Freight costs
Unloading charges
Royalty payments

Determine the new ending balance for each of the following accounts:

	Beginning Balance	Ending Balance
Land	$100,000	$fill in the blank 20
Buildings	$800,000	$fill in the blank 21
Leasehold Improvements	$500,000	$fill in the blank 22
Machinery and Equipment	$700,000	$fill in the blank 23

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Property, Plant and Equipment

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Excavation fees		$11,000
Architectural design fees		8,000
Building permit fee		1,000