Accounting Equation Depreciation Homework Help
- November 29, 2017
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- Category: Accounting
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The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk next to the item letter.
a. Fee paid to attorney for title search $ 2,725
b. Cost of real estate acquired as a plant site: Land 280,900 Cost of real estate acquired as a plant site: Building 52,000
c. Delinquent real estate taxes on property, assumed by purchaser 14,910
d. Cost of razing and removing building 4,855
e.* Proceeds from sale of salvage materials from old building 3,880
f. Special assessment paid to city for extension of water main to the property 27,745
g. Architect’s and engineer’s fees for plans and supervision 61,390
h. Premium on one-year insurance policy during construction 6,600
i. Cost of filling and grading land 12,600
j.* Money borrowed to pay building contractor 972,000
k. Cost of repairing windstorm damage during construction 5,095
l. Cost of paving parking lot to be used by customers 30,230
m. Cost of trees and shrubbery planted 11,660
n. Cost of floodlights installed on parking lot 2,150
o. Cost of repairing vandalism damage during construction 2,335
p.* Proceeds from insurance company for windstorm and vandalism damage 6,830
q. Payment to building contractor for new building 861,000
r. Interest incurred on building loan during construction 32,110
s.* Refund of premium on insurance policy (h) canceled after 11 months 540
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1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts in the table provided. Enter receipts as negative amounts using the minus sign.
2.Determine the amount debited to Land, Land Improvements, and Building. The costs assigned to the land, which is used as a plant site, will not be depreciated, while the costs assigned to land improvements will be depreciated.
3.Explain this seemingly contradictory application of the concept of depreciation.
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