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Solution_for_Demo_for_Chapter_8_Solution

# Solution_for_Demo_for_Chapter_8_Solution - Chapter 8 Demo...

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Chapter 8 Demo Problems- Question #1 Diversified Industries started as a residential construction company. In  recent   years,   it   has   expanded   into   heavy   construction,   ready-mix  concrete, sand and gravel, construction supplies, and earth-moving  services. The company completed the following transactions during  2003. Amounts have been simplified. 2003   Jan. 1 The management decided to buy a 10-year-old building for  \$175,000 and the land on which it was situated for \$130,000. It  paid \$100,000 in cash and signed a mortgage note payable for  the rest. Jan.  12 Paid \$38,000 in renovation costs on the building prior to use. June  19 Bought a third location for a gravel pit (designated Gravel Pit  No. 3) for \$50,000 cash. It was estimated that 100,000 cubic  yards of gravel could be removed. July  10 Paid \$1,200 for ordinary repairs on the building. Aug. 1 Paid   \$10,000   for   costs   of   preparing   the   new   gravel   pit   for  exploitation. Dec.  31 Year-end adjustments:

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a. The building will be depreciated on a straight-line basis over an  estimated useful life of 30 years. The estimated residual value is  \$33,000. b. During 2003, 12,000 cubic yards of gravel were removed from  Gravel Pit No. 3. c. Diversified   purchased   another   company   several   years   ago   at  \$100,000 over the fair values of the net assets acquired. The  goodwill has an indefinite life. d. At the beginning of the year, the company owned equipment with a  cost of \$650,000 and accumulated depreciation of \$150,000. The
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Solution_for_Demo_for_Chapter_8_Solution - Chapter 8 Demo...

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