Chapter 10 - Acquisition and Disposition of PPE - LO 1 - Comput

Wilson Co. purchased land as a factory site for €600,000. Wilson paid €60,000 to tear down two buildings on the land. Salvage was sold for €5,400. Legal fees of €3,480 were paid for title investigation and making the purchase. Architect's fees were €31,200. Title insurance cost €2,400, and liability insurance during construction cost €2,600. Excavation cost €10,440. The contractor was paid €2,200,000. An assessment made by the city for pavement was €6,400. Interest costs during construction were €170,000.

 

            The cost of the land that should be recorded by Wilson Co. is

• €660,480.

• €666,880.

• €669,880.

• €676,280.

Wilson Co. purchased land as a factory site for €600,000. Wilson paid €60,000 to tear down two buildings on the land. Salvage was sold for €5,400. Legal fees of €3,480 were paid for title investigation and making the purchase. Architect's fees were €31,200. Title insurance cost €2,400, and liability insurance during construction cost €2,600. Excavation cost €10,440. The contractor was paid €2,200,000. An assessment made by the city for pavement was €6,400. Interest costs during construction were €170,000.

 

            The cost of the building that should be recorded by Wilson Co. is

• €2,403,800.

• €2,404,840.

• €2,413,200.

• €2,414,240.

On February 1, 2022, Nelson Corporation purchased a parcel of land as a factory site for €200,000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2022. Costs incurred during this period are listed below:

Demolition of old building                                                       €     20,000

Architect's fees                                                                               35,000

Legal fees for title investigation and purchase contract                  5,000

Construction costs                                                                    1,090,000

(Salvaged materials resulting from demolition were sold for €10,000.)

Nelson should record the cost of the land and new building, respectively, as

• €225,000 and €1,115,000.

• €210,000 and €1,130,000.

• €210,000 and €1,125,000.

• €215,000 and €1,125,000.

Worthington Chandler Company purchased equipment for £10,000. Sales tax on the purchase was £500. Other costs incurred were freight charges of £200, repairs of £350 for damage during installation, and installation costs of £225. What is the cost of the equipment?

• £10,000

• £10,500

• £10,925

• £11,275

Fogelberg Company purchased equipment for £12,000. Sales tax on the purchase was £600. Other costs incurred were freight charges of £240, repairs of £420 for damage during installation, and installation costs of £270. What is the cost of the equipment?

• £12,000.

• £12,600.

• £13,110.

• £13,530.

La Bianco Company purchased land for a manufacturing facility for €1,100,000. The company paid €70,000 to tear down a building on the land. Salvage was sold for €10,500. Legal fees of €6,500 were paid for title investigation and making the purchase. Architect's fees were €40,500. Title insurance cost €4,500, and liability insurance during construction cost €13,500. Excavation cost €12,000. The contractor was paid €1,357,000. A one -time assessment made by the city for sidewalks was €7,500. La Bianca installed lighting and signage at a cost of €11,000.

 

            The cost of the land that should be recorded by La Bianca is

• €1,195,000.

• €1,178,000.

• €1,103,500.

• €1,006,500.

La Bianco Company purchased land for a manufacturing facility for €1,100,000. The company paid €70,000 to tear down a building on the land. Salvage was sold for €10,500. Legal fees of €6,500 were paid for title investigation and making the purchase. Architect's fees were €40,500. Title insurance cost €4,500, and liability insurance during construction cost €13,500. Excavation cost €12,000. The contractor was paid €1,357,000. A one -time assessment made by the city for sidewalks was €7,500. La Bianca installed lighting and signage at a cost of €11,000.

 

            The cost of the building that should be recorded by La Bianca is

• €1,505,500.

• €1,432,000.

• €1,423,000.

• €1,357,500.

La Bianco Company purchased land for a manufacturing facility for €1,100,000. The company paid €70,000 to tear down a building on the land. Salvage was sold for €10,500. Legal fees of €6,500 were paid for title investigation and making the purchase. Architect's fees were €40,500. Title insurance cost €4,500, and liability insurance during construction cost €13,500. Excavation cost €12,000. The contractor was paid €1,357,000. A one -time assessment made by the city for sidewalks was €7,500. La Bianca installed lighting and signage at a cost of €11,000.

 

            La Bianca should record land improvements of

• €-0-.

• €11,000.

• €18,500.

• €23,000.

On December 1, 2022, Hogan Co. purchased a tract of land as a factory site for €800,000. The old building on the property was razed, and salvaged materials resulting from demolition were sold. Additional costs incurred and salvage proceeds realized during December 2022 were as follows:

Cost to raze old building                                                                    €70,000

Legal fees for purchase contract and to record ownership                 10,000

Title guarantee insurance                                                                     16,000

Proceeds from sale of salvaged materials                                            8,000

In Hogan's December 31, 2022 statement of financial position, what amount should be reported as land?

• €826,000.

• €862,000.

• €888,000.

• €896,000.

Land was purchased to be used as the site for the construction of a plant. A building on the property was sold and removed by the buyer so that construction on the plant could begin. The proceeds from the sale of the building should be

• classified as other income.

• deducted from the cost of the land.

• netted against the costs to clear the land and expensed as incurred.

• netted against the costs to clear the land and amortized over the life of the plant.