On February 1, 2019, Edwards Corporation purchased a parcel of land as a factory site for $120,000. It demolished an old building on the property and began construction on a newbuilding that was completed on October 2, 2019. Costs incurred during this period are:Demolition of old building$ 10,000Architect's fees20,000Legal fees for title investigation and purchase contract4,000Construction costs625,000Edwards sold salvaged materials resulting from the demolition for $2,000. Required:1. At what amount should Edwards record the cost of the land and the new building, respectively?If an input box should be blank, enter a zero.LandBuildingPurchase price of landDemolition of old buildingArchitect's feesLegal feesConstruction costsSalvaged materialsTotal2. Next Level If management misclassified a portion of the building's cost as part of the cost of the land, what would be the effect on the financial statements?

General points - All the costs incurred in related to build a building should be capitalized to the…

Answered: On February 1, 2019, Edwards…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter18: Accounting For Long-term Assets

Section: Chapter Questions

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Which of the following is recorded as a cost when purchasing an existing building? A. cost to renovate the building before it is in use B. fencing O C. land where the building is located O D. parking lot around the building
If land is purchased as a building site, the cost of removing existing structures is not charged to the Land account.Select one:a. FALSEb. TRUE
Trinkle Company made several purchases of long-term assets during the year. The details of each purchase are presented here. New Office Equipment 1. List price: $42,600; terms: 2/10, n/30; paid within the discount period. 2. Transportation-in: $880. 3. Installation: $400. 4. Cost to repair damage during unloading: $630. 5. Routine maintenance cost after eight months: $150. Basket Purchase of Copier, Computer, and Scanner for $52,500 with Fair Market Values 1. Copier, $23,421. 2. Computer, $12,027. 3. Scanner, $27,852. Land for New Warehouse with an Old Building Torn Down 1. Purchase price, $83,800. 2. Demolition of building, $4,760. 3. Lumber sold from old building, $1,780. 4. Grading in preparation for new building, $7,900. 5. Construction of new building, $279,000.
How much is the new building? under the section of property, plant and equipment, how much should be reported as the total cost of land show solution
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Which of the following gross valuation methods on a building would most likely be used by a construction firm in its financial and management accounting of its projects? a.) Unit in place b.) Quantity survey method c.) Square Footage method d.) none of the above
Novak Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment. Abstract company's fee for title search Architect's fees Cash paid for land and dilapidated building thereon Removal of old building Less: Salvage Interest on short-term loans during construction Excavation before construction for basement Machinery purchased (subject to 2% cash discount, which was not taken) Freight on machinery purchased Storage charges on machinery, necessitated by noncompletion of building when machinery was delivered New building constructed (building construction took 6 months from date of purchase of land and old building) Assessment by city for drainage project Hauling charges for delivery of machinery from storage to new building Installation of machinery Trees, shrubs, and other landscaping after completion of building (permanent in nature) $45,000 12,375 $1,170 7,133 195,750 32,625 16,650 42,750 123,750 3,015…
On January 1, Mitzu Company pays a lump-sum amount of $2,750.000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $762,500, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 is valued at $366,000 and is expected to last another 12 years with no salvage value. The land is valued at $1,921,500. The company also incurs the following additional costs. Cont to denolish Building 1 Cost of additional land grading Cost to construet Building 3, havinga useful life of 25 yeara and a $402,00 salvage value Cost of new Land Improvemente 2, having a 20-year ueeful 1ife and no ealvage value $343, 400 191, 400 2,242,000 173,000 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Percent of Total Appralsed Value Total cost of acquisition Allocation of Purchase Price Apportioned Cost Appraised Value Land Building 2 Land…
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Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X). _____ 1. Parking lots _____ 2. Electricity used by a machine _____ 3. Interest on building construction loan _____ 4. Cost of trial runs for machinery _____ 5. Drainage costs _____ 6. Cost to install a machine _____ 7. Fences _____ 8. Unpaid (past) property taxes assumed _____ 9. Cost of tearing down a building when land and a building on it are purchased

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