Question

CALCULATOR PRINIER VERSION BACK NEX $24,000 Exercise 10-05 Waterway 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 5624 Architect's fees 3,304 Cash paid for land and dilapidated building thereon 104,400 Removal of old building Lass: Salvage 5.600 17,400 Interest on short-term loans during construction 8,880 Excavation before construction for basement 22.300 Machinery purchased (subject to 2% cash discount, which was not taken) 66,000 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) 502.000 Assessment by city for drainage project Hauling charges for delivery of machinery from storage to new building 744 Installation of machinery 2,400 Trees, shrubs, and other landscaping after completion of building permanent in nature) 1.609 2,616 1.920 Determine the amounts that should be debited to Land, to Buildings, and to Machinery and E lprent. Assume the benefits of capitalizing interest during construction exceed the cost of implementation Company uses net method to record discount. (Please leave spaces blank if there is no answer. Do not enter eros in these spaces) Machinery and Equipment Other Abstract fees Architect's fees Cash paid for land and old building Removal of old building Interest on loans during construction Excavation before construction Machinery purchased Freight on machinery Storage charges caused by noncompletion of building New building Assessment by city Hauling charges machinery Installation machinery Landscaping

Answer 1

Buildings M&E Other Land $624 $3,804 $104,400 $17,400 $8,880 $22,800 $1,320 [Misc. expense (Discount Lost) --> $66,000 x 2%] Expense Items: Abstract fees for title search Architect's fees Cash paid for land and old building Removal of old building ($24,000 - $6,600) Interest on loans during construction Excavation before construction Machinery purchased Freight on machinery Storage charges caused by noncompletion of building New building Assessment by city for drainage project Hauling charges for delivery of machinery Installation of machinery Landscaping after completion of building Total costs accounted for $64,680 $1,608 $2,616 [Misc. expense) $582,000 $1,920 $744 [Misc. expense] $2,400 $6,480 $130,824 $617,484 $68,688 $4,680 EXPLANATION: Costs incurred till the time land is ready for constructing building or Machinery & Equipment (M&E), etc. shall be considered as cost of the land; Costs incurred till completion of construction of building shall be considered as cost of the building; Costs incurred to purchase and install machinery and equipment till the time it is ready for carrying out production activity shall be considered as cost of Machinery and Equipment.