Land- $ Buildings- $ Leasehold improvments- $ Equipment- $ Balance at December 3
ID: 2528704 • Letter: L
Question
Land- $
Buildings- $
Leasehold improvments- $
Equipment- $
Balance at December 31, 2014Land- $
Buildings- $
Leasehold improvments- $
Equipment- $
SS?GNMENT RESOURCES Problem 10-1 omework Chapter 10 At December 31, 2013, certain accounts included in the property, plant, and equipment section of Reagan Company's balance sheet had the following balances. Land Buildings Leasehold improvements Equipment $230,480 909,780 668,910 884,670 Exeroise 10-5 Part During 2014, the following transactions occurred. Exercise 10-17 1. Land site number 621 was acquired for $856,900. In addition, to acquire the land Reagan paid a $56,760 commission to a real estate agent. Costs of $35,280 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $20,020 2. A second tract of land (site number 622) with a building was acquired for $420,100. The closing statement indicated that the land value was $306,350 and the building value was IFRS Mutiple Choice $113,750. Shortly after acquisition, the building was demolished at a cost of $48,800. A new building was constructed for $335,230 plus the following costs. Question 02 Excavation fees Architectural design fees Building permit fee Imputed interest on funds used during construction (stock financing) $38,560 13,080 2,900 9,380 IFRS Mustiple Choice The building was completed and occupied on September 30, 2014 eview Results by Study bjective 3. A third tract of land (site number 623) was acquired for $652,690 and was put on the market for resale 4. During December 2014, costs of $92,370 were incurred to improve leased office space. The related lease will terminate on December 31, 2016, and is not expected to be renewed. (Hint: Leasehold improvements should be handled in the same manner as land improvements.) 5. A group of new machines was purchased under a royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was $85,550, freight costs were $3,900, installation costs were $2,640, and royalty payments for 2014 were $17,820.
Explanation / Answer
Note :(1) The depreciation on Building,Leasehold Improvements and Equipment has not been considered as the depreciation rate or the method of Charging depreciation is not given in the question.
(2) All the costs incurred for purchasing the asset and cost incurred till the asset is put to use will be capitalised in the value of asset
(3) In Point (5),Royalty is required to be paid on basis of units of production for the machines.As there is no one-time payment for royalty at the time of purchasing the machine.Royalty costs incurred every year on basis of units of production is to be charged to Profit & Loss and will not be capitalised in the value of asset.
1. Land Balance as at December 31,2014.
$ 2,30,480
2. Building Balance at December 31,2014
3. Leasehold Improvements Balance at December 31,2014
4. Equipments Balance at December 31,2014
Balance as at December 31,2013$ 2,30,480
Addition During 2014 (Point 1) Land Acquisition Value $ 8,56,900 (+) Commission to real estate agent $ 56,760 (+) Cost for clearing the land $ 35,280 (-) Recovery from Timber and Gravel ($ 20,020) Total Addition(Point 1) $ 9,28,920 Addition : (Point 2) (Site Number 622) Land Value $ 3,06,350 Total Addition(Point 2) $ 3,06,350 Addition : (Point 3) (Site Number 623) Land Value $ 6,52,690 Total Addition(Point 3) $ 6,52,690 Total Addition During 2014(Point 1 + 2 + 3) $ 18,87,960 Land Balance as at December 31,2014(Opening + Addition) $ 21,18,440Related Questions
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