Meman The Italian Bread Company purchased land as a factory site for $65,000. An old building on the property was demolished, andconstruction began on a new building. Costs incurred during the first year are listed as follows:Demolition of old buildingSale of salvaged materialsArchitect fees (for new building)Legal fees (for title investigation of land)Property taxes on the land (for the first year)Building construction costsInterest costs related to the constructionRequired:$ 8,500(1,200)17,5002,5003,500550,00020,500Determine the amounts that the company should record in the Land and the Building accounts. (Amounts to be deducted should beindicated by a minus sign.)Purchase price of landDemolition of old buildingSale of salvaged materialsArchitect fees (for new building)Legal fees (for title investigation of land)Building construction costsInterest costs related to the constructionTotalsLandBuilding$65,000$17,5002,500550,00020,500$67,500 $588,000

Cost of Building:8500(demolition of old building) - 1200(sale of salvaged material) +…

Answered: The Italian Bread Company purchased…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 23P

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During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years Low-cost repairs throughout the year totaled $79,000 Replaced a broken gear on a machine for $6,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated five machines for $100,000 to improve efficiency in production of their remaining useful life of five years Low-cost repairs throughout the year totaled $70,000 Replaced a broken gear on a machine for $10,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
On January 6, Year 1, Mount Jackson Corporation purchased a tract of land for a factory site for $845,000. An existing building on the site was demolished and the new factory was completed on October 11, Year 1. Additional cost data are shown below: Construction cost of new building $ 1,032,000 Real estate and attorney fees Architect fees Cost to demolish old building Salvage recovery from old building What is the capitalized cost of the new building? O $1,205,900 O $1,120,000 O $1,105,000 O $1,184,900 21,000 88,000 79,900 (15,000)
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On January 6, Year 1, Mount Jackson Corporation purchased a tract of land for a factory site for $825,000. An existing building on the site was demolished and the new factory was completed on October 11, Year 1. Additional cost data are shown below: Construction cost of new building $ 1,000,000 Real estate and attorney fees 18,200 Architect fees 84,000 Cost to demolish old building 77,100 Salvage recovery from old building (13,000 ) Which of the following are the capitalized costs of the land and the new building, respectively? Multiple Choice A $843,200 and $1,148,100 B $920,300 and $1,071,000 C $825,000 and $1,166,300 D $907,300 and $1,084,000
The Italian Bread Company purchased land as a factory site for $63,000. An old building on the property was demolished, and construction began on a new building. Costs incurred during the first year are listed as follows: Demolition of old building $ 8,300 Sale of salvaged materials (1,000 ) Architect fees (for new building) 16,500 Legal fees (for title investigation of land) 2,300 Property taxes on the land (for the first year) 3,300 Building construction costs 530,000 Interest costs related to the construction 19,500 Required: Determine the amounts that the company should record in the Land and the Building accounts. (Amounts to be deducted should be indicated by a minus sign.)
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Martini Company incurred the following costs in purchasing a land as a factory site:Purchase price 2,400,000Cost of tearing down old building 240,000Legal fee for title investigation 15,000Title insurance 10,000 Architect fee 125,000Liability insurance during construction 25,000Excavation cost 40,000Payment to building contractor 8,800,000Special assessment by city for public improvement 30,000Interest cost during construction 300,000 What is the cost of the building?
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