Question: Down ham Industries recently completed several transactions relating to plant assets. For each transaction described, determine the dollar amount to be capitalized as well as

Down ham Industries recently completed several transactions relating to plant assets. For each transaction described, determine the dollar amount to be capitalized as well as the account title to be used.
A. Down ham purchased a parcel of land on which it will construct a manufacturing facility. The purchase price of $ 155,000 included survey fees of $ 2,700, a title document costing $ 800, and brokers’ fees of $ 7,500. Down ham also incurred $ 10,500 in blasting costs to prepare the land for construction of the building.
B. Down ham constructed the manufacturing facility referred to in part (A). Materials and labor costs amounted to $ 278,000, the architect’s fee was $ 18,500, and the necessary permits totaled $ 3,600. Insurance carried during the construction was $ 2,300, and interest on the construction loan amounted to $ 14,200.
C. Down ham paid the following bills relating to the use of its plant assets:
(1) Annual real estate taxes, $ 14,250.
(2) Annual insurance premiums, $ 8,380.
(3) Annual mortgage payments, $ 124,800, of which $ 61,700 was interest.
(4) Painting of the outside of the buildings, $ 7,200.

Step by Step Solution

3.33 Rating (171 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

a 155 000 10 500 165 ... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

423-B-A-I (5494).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!