Question

ed to Instructie Prepare the 510-7 warehou building how it should be reported. newly formed corporation, incurred the ST0-(L01,3) (Treatment of Various Costs) Ben Sisko Supply Company Equipment mg expenditures related to Land, to Buildings, and to Machinery and $ 520 Abstract company's fee for title search 3,170 Architect's fees 87,000 Cash paid for land and dilapidated building thereon $20,000 Removal of old building 5,500 14,500 Less Salvage 7.400 Interest on short-term loans during construction 19,000 Excavation before construction for basement 55,000 Machinery purchased (subject to 2% cash discount, which was not taken 1,340 Freight on machinery purchased Storage charges on machinery, necessitated by noncompletion of 2,180 building when machinery was delivered New building constructed (building construction took 6 months from 485,000 date of purchase of land and old building) 1.000 Assessment by city for drainage project 620 Hauling charges for delivery of machinery from storage to new building Installation of machinery 2,000 Trees, shrubs, and other landscaping after completion of building (permanent in nature) 5.400 Inst Instructions Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment capitalizing interest during construction exceed the cost of implementation. Indicate how any costs or co should be recorded. m

Answer 1

acinexy Buildings Equipmest Land Other AbAtract fees Arthitect's fees S20 $ 3,170 Cash paid tor land and old building o00t8 Removal of old 14, S00 building Interest on Loans 7,400 oluring construction Excavation be fore $19,000 construction Machinery Purchascd reight on Machinery Misc $S3,900 1, 100expense CDiscount lest) 1,340 dtorage charges caused by non $,180 Misc ex pense Loss completien of buildiny New building 48000 $1,600 AseMment by city Hauling charges- Machineny MIse expense 620- loss) 2,000 Instaluation Machineay |+ S,५०० $103,020 4514t ,20 3,900 Landscaping

Caleulation: Machiney Pur chased: X7aliscound Miscelaneous expensel Siscount lost)=So00 $1100 Machinery Ale 55000 1,100 53,900