During the current year, Castle Corp. completed construction of its new corporate headquarters. Castle purchased land with
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During the current year, Castle Corp. completed construction of its new corporate headquarters. Castle purchased land with an old building for $187,500. The land was valued at $175,000 and the building at $12,500. Castle demolished the building. Additional expenditures on the project follow.
- Interest of $36,750 on construction financing incurred after completion of construction of the headquarters building.
- Cost of $900,000 for construction of the new building.
- Interest of $46,500 (lesser of actual and avoidable interest) on construction financing paid during construction of the headquarters building.
- Payment of $4,625 for delinquent real estate taxes assumed by Castle upon purchase of the land and building.
- Liability insurance premium of $3,000 covering the construction period.
- Cost of $16,250 for razing the existing building.
- Costs of $34,000 to move into the new headquarters.
- Purchase of office equipment for $25,000, terms 2/10, n/30. Payment was made within 10 days and the company records purchases net of discount.
Assuming no previous acquisitions of plant assets, determine Castle’s ending balance for each of the plant asset accounts of (a) Land, (b) Building, and (c) Equipment, given the above information. Compute (d) total expense, if any, to be recognized from the above expenditures.
(a) Ending balance in Land | Answer |
(b) Ending balance in Building | Answer |
(c) Ending balance in Equipment | Answer |
(d) Total expense | Answer |
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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