Chap10Answers_to_Suggested_Problems

Chap10Answers_to_Suggested_Problems - Chapter 10 -...

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Chapter 10 - Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition Capitalized cost of land : Purchase price $60,000 Demolition of old building $4,000 Less: Sale of materials (2,000 ) 2,000 Legal fees for title investigation 2,000 Total cost of land $64,000 Capitalized cost of building : Construction costs $500,000 Architect's fees 12,000 Interest on construction loan 5,000 Total cost of building $517,000 Note: Property taxes on the land for the period after acquisition are not part of acquisition cost. They are expensed in the period incurred. To record the purchase of a machine. Machine ($45,000 + 2,200 + 700 + 1,000) ....................... 48,900 ........................................................ Accounts payable ......................................................................... 47,200 ............................................................................ Cash ........................................................................... 1,700 To record prepaid insurance for the machine. Prepaid insurance. ....................................................... 900 10-1 Chapter 10 Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition EXERCISES Exercise 10-1 Exercise 10-2
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Chapter 10 - Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition ............................................................................ Cash .............................................................................. 900 10-2
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Chapter 10 - Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition Exercise 10-3 Requirement 1 Cost of land and building: Purchase price $4,000,000 Title search and insurance 16,000 Legal fees 5,000 State transfer fees 4,000 Total cost $4,025,000 Note: The pro-rated property taxes for the period after acquisition are not included in the initial valuation of the land and building. They are recorded instead as prepaid taxes and expensed over the related period. The total is allocated to the land and building based on their relative fair values:
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This note was uploaded on 02/28/2012 for the course ACCT 302 taught by Professor Baltimore during the Spring '10 term at University of Baltimore.

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Chap10Answers_to_Suggested_Problems - Chapter 10 -...

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