Problem 10-5 (A) Prepare a schedule that discloses the individual costs making u
ID: 2520353 • Letter: P
Question
Problem 10-5
(A) Prepare a schedule that discloses the individual costs making up the balance in the land account in respect of land site number 101 as of September 30, 2018.
SARASOTA CORPORATION
Cost of Land (Site #101)
As of September 30, 2018
(Account Titles) for part A &B
Interest Capitalized During 2018
Architect's Fees
Cost of Land and Old Building
Plans, Specifications, and Blueprints
Real Estate Broker's Commission
Legal Fees
Interest Capitalized During 2017
Cost of Building
Title Insurance
Removal of Old Building
Cost of Land
Fixed Construction Contract Price
(B)Prepare a schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2018.
SARASOTA CORPORATION
Cost of Building
As of September 30, 2018
(Account Titles) for part A &B
Interest Capitalized During 2018
Architect's Fees
Cost of Land and Old Building
Plans, Specifications, and Blueprints
Real Estate Broker's Commission
Legal Fees
Interest Capitalized During 2017
Cost of Building
Title Insurance
Removal of Old Building
Cost of Land
Fixed Construction Contract Price
Problem 10-5
On January 1, 2017, Sarasota Corporation purchased for $730,000 a tract of land (site number 101) with a building. Sarasota paid a real estate broker’s commission of $52,560, legal fees of $8,760, and title guarantee insurance of $26,280. The closing statement indicated that the land value was $730,000 and the building value was $146,000. Shortly after acquisition, the building was razed at a cost of $78,840.Sarasota entered into a $4,380,000 fixed-price contract with Slatkin Builders, Inc. on March 1, 2017, for the construction of an office building on land site number 101. The building was completed and occupied on September 30, 2018. Additional construction costs were incurred as follows.
Plans, specifications, and blueprints $30,660 Architects’ fees for design and supervision 119,720
The building is estimated to have a 40-year life from date of completion and will be depreciated using the 150% declining-balance method.
To finance construction costs, Sarasota borrowed $4,380,000 on March 1, 2017. The loan is payable in 10 annual installments of $438,000 starting on March 1, 2018, plus interest at the rate of 10%. Sarasota’s weighted-average amounts of accumulated building construction expenditures were as follows.
For the period March 1 to December 31, 2017 $1,898,000 For the period January 1 to September 30, 2018 2,774,000
Explanation / Answer
EXPLANATION A -- Below is the schedule for cost of land --
EXPLANATION B -- Below is the schedule for individual costs --
SARASOTA CORPORATION Schedule of Cost of land As of September 30,2018 Site 101 Purchased inclusive of building 730000 Add: Real estate broker's commission 52560 Add: Legal fees 8760 Add: Title guarantee insurance fees 26280 Add: Demolition of building 78840 Total Cost of land 896440Related Questions
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