Question

Chapter 9 Quiz Help Save & Exi Check After planning to build a new plant, Kallisto Backpack Manufacturing purchased a large lot on which a small building was located. The negotiated purchase price for this real estate was $1,650,000 for the lot plus $570,000 for the building. The company paid $84,000 to have the old building torn down and $114,000 for levelling the lot. Finally, it paid $3.330,000 in construction costs, which included the cost of a new building plus $224,000 for lighting and paving a parking lot next to the building points Present a single journal entry to record the costs incurred by Kallisto, all of which were paid in cash (assume a date of March 10, 2020 for your entry) eBook View transaction list Journal entry worksheet Record the costs of plant assets of 4 Next > ston OB7ce_ch.ppt langton OB7ce_ch..ppt langton_Ob7ce_ch.pl Type here to search

Answer 1

Answer t As per the cost principle of accounting all the expenser incurned till the running of an asset should be included in the cost of land, or ay other abset. There are various costs such Har delivery Expegs, installations costs, Juha lng expeques set up costs fets are should be added to the cost of such as set. In the given question Kalisto has purchased a plot with a وماكللها | ط عموام عا با غووله ماعمو ل ط in such scenario he first broke all the old building situated I on such land and the levels up the land to level of land Therefore all such costs incurred till the fill and level a lot are incurred in the cost of building - After which the cost incurred to lighting and equing a parking area to next are the land improvement and the finally the building Tost is segregghes. KALISTO Journal Entry to record the costs of plant quets ||1960 Credit ($) particulars to Debit March | Land Ale - Oř. | 2418000 11.10.2000 Land Improvements Ale on 224000 Building Ale Ov.33.30000 - To Gsh Ale | CBeing to record the costs of plant assets) Total 5972000 5972000 5972000

washing Noter o Cost of land As earlier discussed, all the costs fill and level a lot from purchase cast of land incurred till the are indeleted in the C ost of land Negotiabed Purchase price of land Nefo Gabel Parch que puíce of Building Tear Down building Demolition costs of Building cost of Levelling the lot 1650000 570000 94000 - | 114000 Total cost of Land 2418000 @_cost of improvements of land cost of improvement of land includes the lighting and paving a parking costs Cost of impovergent of 1994 : $ 224000 o cart of New Bitliding All the construction costs incurred to construct a A new bulling is cost of new building cost of New Building = $3330000