1A how do you solve Equi-Tee, Inc. ° LinkedIn Tutor al 1M?How to Create a Kille

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1A how do you solve Equi-Tee, Inc.

° LinkedIn Tutor al 1M?How to Create a Kille 1 box (1,056 leeahe ? tub a d Showers at t Key Strategiets Google ? Restaurant.com Rest ? Car Max Job Searchl My Account login Question 3 of 3(1A-ES08) Essay Assessment 1A 1A-ES08 Essay in 2015, We-Gol-Stuft, Inc. purchased some land that it used to build a factory. Expenditures during the year included: $100,000 to buy the land $5,000 in Realtor fees $3,000 in accrued property tax $10,000 to demolish an old building on the property $2,000 salvage value from the demolished building $16,000 for architectural fees $54,000 for construction costs $7,000 for supervision during construction $1,500 for 6 months of insurance during construction Construction was completed in 5 months $4,400 for shrubs and fences $8,000 for office furniture : A. Cost of the land B. Cost of the factory C. We-Got-Stuff is disposing of a truck that originally cost $50,000 and has $40,000 in accumulated depreciation Journal entry if We-Got-Stuff sells the truck for $11,000 D. Jounal entry if We-Got-Stuff XYZ sells the truck for $6,000 Time Value Tables Revi Next Mark Previous

Explanation / Answer

Solution As per IAS 16 Property, Plant, and Equipment includes directly attributable to bring the assets to the location and the condition necessary for it to capable of operation in manner In this Case, the intention is to acquire land and dimolition cost of building is seen simply as cost directly atributable to bring the land to the condition to be operated in a manner intended my management Logically. Since dimolition cost of building is added to the cost of land Cost of Land Expenses for buying Land (a) $ 100,000 Expenses for Realtor Fees (b) $ 5,000 Expenses for Accrued Property Tax (c) $ 3,000 Expenses for dimolition of an old Building (d) $ 10,000 Less :- Saving on dimolition of an old Building (e) $ 2,000 Total Cost Of Land ( f) = a+b+c+d-e $ 116,000 Cost of the Factory Total Cost of Land (f) $ 116,000 Architecture Fees $ 16,000 Construction Cost $ 54,000 Supervision Cost $ 7,000 Insurance Cost $ 1,500 Shrubes and fences $ 4,400 Office Furniture $ 8,000 Total Cost of Factory $ 206,900 Original cost of Truck $ 50,000 Less :- Accumulated Depreciation $ 40,000 Book Value Of Truck $ 10,000 Sell price of truck $ 11,000 Profit on sale ( sale price - book value) i.e $ 11,000- $ 10,000 $ 1,000 Journal Entry Bank A/c Dr. $ 11,000 Accumulated Depreciation A/c Dr. $ 40,000           To Profit on Sale $ 1,000           To Cost of Truck $ 50,000 Being Truck sold for $ 50,000 which leaded profit of $ 1,000 Original cost of Truck $ 50,000 Less :- Accumulated Depreciation $ 40,000 Book Value Of Truck $ 10,000 Sell price of truck $ 6,000 Loss on sale ( sale price - book value) i.e $ 6,000- $ 10,000 $ 4,000 Journal Entry Bank A/c Dr. $ 6,000 Accumulated Depreciation A/c Dr. $ 40,000 Loss on sale of Truck $ 4,000           To Cost of Truck $ 50,000 Being Truck sold for $ 50,000 which leaded loss of $ 4000 Please feel free to ask if anything about above solution in comment section of the question.

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