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In January 2013, Mitzu Co. pays $2,700,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $579,500, with a useful life of 20 years and an $90,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $549,000 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,921,500. The company also incurs the following additional costs:

Cost to demolish Building 1

$

338,400

Cost of additional land grading

187,400

Cost to construct new building (Building 3), having a useful life
of 25 years and a $400,000 salvage value

2,282,000

Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value

173,000

1.

value:
10.00 points

Required information

Required:

1.

Allocate the costs incurred by Mitzu to the appropriate columns and total each column.

Allocation of purchase price

Appraised Value

Percent of Total Appraised Value

x

Total cost of acquisition

=

Apportioned Cost

Land

x

=

Building 2

x

=

Land Improvements 1

x

=

Totals

Land

Building 2

Building 3

Land Improvements 1

Land Improvements 2

Purchase Price

Demolition

Land grading

New building (Construction cost)

New improvements cost

Totals

2.

Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2013.

2.Journal entry worksheet

Record the costs of the plant assets.

Note: Enter debits before credits.

Date

General Journal

Debit

Credit

Jan 01

3.

Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2013 when these assets were in use.

Record the year-end adjusting entry for the depreciation expense of Building 2.

Date

General Journal

Debit

Credit

Dec 31

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Collen Von
Collen VonLv2
28 Sep 2019

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Problem 10-2

[Partially correct answer.] Your answer is partially correct.Try again.

Selected accounts included in the property, plant, and equipmentsection of Coronado Corporation’s balance sheet at December 31,2016, had the following balances.

Land $438,000
Land improvements 204,400
Buildings 1,606,000
Equipment 1,401,600


During 2017, the following transactions occurred.

1. A tract of land was acquired for $219,000 as a potentialfuture building site.
2. A plant facility consisting of land and building was acquiredfrom Mendota Company in exchange for 29,200 shares of Coronado’scommon stock. On the acquisition date, Coronado’s stock had aclosing market price of $37 per share on a national stock exchange.The plant facility was carried on Mendota’s books at $160,600 forland and $467,200 for the building at the exchange date. Currentappraised values for the land and building, respectively, are$335,800 and $1,007,400.
3. Items of machinery and equipment were purchased at a total costof $584,000. Additional costs were incurred as follows.

Freight and unloading $18,980
Sales taxes 29,200
Installation 37,960

4. Expenditures totaling $138,700 were made for new parkinglots, streets, and sidewalks at the corporation’s various plantlocations. These expenditures had an estimated useful life of 15years.
5. A machine costing $116,800 on January 1, 2009, was scrapped onJune 30, 2017. Double-declining-balance depreciation has beenrecorded on the basis of a 10-year life.
6. A machine was sold for $29,200 on July 1, 2017. Original cost ofthe machine was $64,240 on January 1, 2014, and it was depreciatedon the straight-line basis over an estimated useful life of 7 yearsand a salvage value of $2,920.


(a) Calculate the balance at December 31, 2017 in each of thefollowing balance sheet accounts. (Hint: Disregard the relatedaccumulated depreciation accounts.)

Balance at December 31, 2017
Land
$
[Entry field with incorrect answer]
Land Improvements
$
[Entry field with correct answer]
Buildings
$
[Entry field with correct answer]
Equipment
$
[Entry field with incorrect answer]

On April 1, 2017, Ayayai Corp. was awarded $450,000 cash ascompensation for the forced sale of its land and building, whichwere directly in the path of a new highway. The land and buildingcost $60,000 and $280,000, respectively, when they were acquired.At April 1, 2017, the accumulated depreciation for the buildingamounted to $195,000. On August 1, 2017, Ayayai purchased a pieceof replacement property for cash. The new land cost $200,000 andthe new building cost $540,000. The new building is estimated tohave a useful life of 20 years, physical life of 30 years, residualvalue of $270,000, and salvage value of $75,000. Ayayai preparesfinancial statements in accordance with IFRS

REQUIRED:

Prepare any journal entry required at December 31, 2017, under(1) IFRS and (2) ASPE.

1) IFRS

Debit:

Credit:

2) ASPE

Debit:

Credit:

*NOTE: There are only two accounts per entry and you can useonly the following accounts:

-Gain on Disposal of Building

-Land

-No Entry

-Depreciation Expense

-Cash

-Accumulated Depreciation - Buildings

-Buildings*

Sage Company was incorporated on January 2, 2018, but was unable to begin manufacturing activities until July 1, 2018, because new factory facilities were not completed until that date. The Land and Buildings account reported the following items during 2018. January 31 Land and building $170,300 February 28 Cost of removal of building 9,885 May 1 Partial payment of new construction 63,960 May 1 Legal fees paid 4,350 June 1 Second payment on new construction 42,600 June 1 Insurance premium 2,280 June 1 Special tax assessment 3,670 June 30 General expenses 38,411 July 1 Final payment on new construction 27,990 December 31 Asset write-up 50,411 413,857 December 31 Depreciation-2018 at 1% (3,653 ) December 31, 2018 Account balance $410,204 The following additional information is to be considered. 1. To acquire land and building, the company paid $90,300 cash and 800 shares of its 8% cumulative preferred stock, par value $100 per share. Fair value of the stock is $117 per share. 2. Cost of removal of old buildings amounted to $9,885, and the demolition company retained all materials of the building. 3. Legal fees covered the following. Cost of organization $660 Examination of title covering purchase of land 1,610 Legal work in connection with construction contract 2,080 $4,350 4. Insurance premium covered the building for a 2-year term beginning May 1, 2018. 5. The special tax assessment covered street improvements that are permanent in nature. 6. General expenses covered the following for the period from January 2, 2018, to June 30, 2018. President’s salary $34,543 Plant superintendent’s salary-supervision of new building 3,868 $38,411 7. Because of a general increase in construction costs after entering into the building contract, the board of directors increased the value of the building $50,411, believing that such an increase was justified to reflect the current market at the time the building was completed. Retained earnings was credited for this amount. 8. Estimated life of building-50 years. Depreciation for 2018-1% of asset value (1% of $365,300, or $3,653). Prepare entries to reflect correct land, buildings, and depreciation accounts at December 31, 2018. (Round answers to 0 decimal places, e.g. 5,275. Complete the journal entries.

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