On January 3, 2019, HDR Company acquired a tract of land just outside the city limits....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 3, 2019, HDR Company acquired a tract of land just outside the city limits. The land and existing building were purchased for $4.8 million. HDR Company paid $800,000 and signed a noninterest-bearing note requiring the company to pay the remaining $4,000,000 on December 31, 2020. An interest rate of 7% properly reflects the time value of money for this type of loan agreement. Transfer taxes, title insurance, and other costs totaling $48,000 were paid at closing. During February, the old building was demolished at a cost of $240,000, and an additional $200,000 was paid to clear and grade the land. Construction of a new building began on March 1 and was completed on October 30. Čonstruction expenditures were as follows: March 31 June 30 July 31 September 1 $1,600,000 2,400,000 2,400,000 1,200,000 HDR Company did not borrow specifically for the construction project, but did have the following debt outstanding throughout 2019: S12,000,000, 8% long-term note payable $4,000,000, 5% long-term note payable In December 2019, the company purchased equipment and office furniture and fixtures for a lump-sum price of S1,600,000. The fair values of the equipment and the furniture and fixtures were $1,080,000 and S720,000, respectively. In December 2019, HDR paid $680,000 for the construction of parking lots and landscaping. Required: 1. Determine the initial values of the various assets that HDR acquired or constructed during 2019. (Hint: the assets mentioned are listed below;) a. Land b. Land Improvements c. Equipment d. Furniture and Fixtures e. Building 2. How much interest expense will HDR report in its 2019 income statement? On January 3, 2019, HDR Company acquired a tract of land just outside the city limits. The land and existing building were purchased for $4.8 million. HDR Company paid $800,000 and signed a noninterest-bearing note requiring the company to pay the remaining $4,000,000 on December 31, 2020. An interest rate of 7% properly reflects the time value of money for this type of loan agreement. Transfer taxes, title insurance, and other costs totaling $48,000 were paid at closing. During February, the old building was demolished at a cost of $240,000, and an additional $200,000 was paid to clear and grade the land. Construction of a new building began on March 1 and was completed on October 30. Čonstruction expenditures were as follows: March 31 June 30 July 31 September 1 $1,600,000 2,400,000 2,400,000 1,200,000 HDR Company did not borrow specifically for the construction project, but did have the following debt outstanding throughout 2019: S12,000,000, 8% long-term note payable $4,000,000, 5% long-term note payable In December 2019, the company purchased equipment and office furniture and fixtures for a lump-sum price of S1,600,000. The fair values of the equipment and the furniture and fixtures were $1,080,000 and S720,000, respectively. In December 2019, HDR paid $680,000 for the construction of parking lots and landscaping. Required: 1. Determine the initial values of the various assets that HDR acquired or constructed during 2019. (Hint: the assets mentioned are listed below;) a. Land b. Land Improvements c. Equipment d. Furniture and Fixtures e. Building 2. How much interest expense will HDR report in its 2019 income statement?
Expert Answer:
Answer rating: 100% (QA)
10Land punchaie cash paid cost 800000 34937 60o present value d n... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
A lumber company purchased a tract of land for $70,000 that contained an estimated 25,000 usable trees. The value of the land was estimated at $20,000. In the first year of operation, the lumber...
-
The Doris Company traded a tract of land to Ricks Real Estate for a similar tract of land with no significant effect on future cash flows. The old land had a carrying value of $ 6,500,000. The land...
-
For $20 million, Ross Adams Mining acquired a tract of land containing a large deposit of anthracite coal. Ross Adams believes the most economical way to extract the coal is to strip- mine the site....
-
Not sure if this note is applicable to the problem? (A2) Prove there is a bijection between any two countably infinite sets.
-
A researcher has collected a random sample of data about Honda Accords for sale in Ontario. The data indicate year of the car, number of kilometres, and list price. Create and analyze all possible...
-
How was Canadas budget deficit of 2011 influenced by the Bank of Canadas low interest rate policy?
-
Verify that the fluctuating component of velocity (2D assumption) satisfies the following equation: \[\begin{equation*}\frac{\partial v_{x}^{\prime}}{\partial x}+\frac{\partial...
-
A soprano and a bass are singing a duet. While the soprano sings an A# at 932 Hz, the bass sings an A# but three octaves lower. In this concert hall, the density of air is 1.20 kg/m3 and its bulk...
-
an auto body shop has 5 jobs to process through its facilities over the next few weeks. the processing time and due dates for the 5 jobs are shown in the following table. job processing time (days)...
-
Match the marketing data to the marketing mix component (product, price, place, or promotion) that it would be most helpful for analyzing. Marketing Data Competitor price Order fulfillment time...
-
Discuss what it is like to be a virtual employee, whether you have experienced being a virtual employee or not, and how you think it might affect your performance. Post a substantive, researched, and...
-
Let T: P3 R be defined by T (ao + ax + az + a3x): {0.00} and C= Given [7] Pc (T(u)). Pc (T(u)) = 2 2 -2 1 = 1 2 2 -30 -300 + a + 2a2 -ao + 3a + az -ao+ a2-3a3 a3 Let u = - -2+zB = {x, x, x, 1}. use...
-
Consider a doughnut that has a diameter of 10cm, including the whole in the middle which has 2 cm. Furthermore, consider that the cross-section of this doughnut is a perfect circle. Your goal is to...
-
III. Mariah Corp has the following non-trading equity securities 31, 2020: IV. Security ABC ordinary shares DEF ordinary shares GHI preference shares # of Shares 9,000 30,000 2,400 The following...
-
If A is the matrix associated to the system (S), so that the system can be written in the form -( Ak X Y Z -k h+k 2h + 1 the linear transformation lk: R IR associated to Ag with respect to the...
-
Let A = (3 2 3 3 5 7 .9 16 23 Suppose 8(A)=Y. Find Y Write A as the sum of x matrices each of nk unity (!!!) Find an orthonormal basis of the row space of A. [c.y. 2008;97]
-
Which transaction results in a company debiting cash and crediting notes payable? Select one: a. Issuance of notes payable b. Redemption of notes payable c. Cash receipt of interest on notes d....
-
Describe the general ways that the revised Form 990, applicable for tax year 2008 and beyond, is different from previous versions.
-
Eastern Inc.'s equity includes 8%, $25 par preferred stock. There are 100,000 shares authorized and 45,000 shares outstanding. Assume that Eastern declares and pays preferred dividends quarterly....
-
McLaughlin Manufacturing has the following data available for its March 31, 2019, payroll: Wages earned ......................................................... $1,250,000* Federal income taxes...
-
Each of the following situations relates to the recognition of revenue: a. A store sells a gift card in December which will be given as a Christmas present. The card is not redeemed until January. b....
-
Assume you want to use random tests on an FIR filter program. How would you know when the program under test is executing correctly?
-
Three devices are attached to a microprocessor: Device 1 has highest priority and device 3 has lowest priority. Each devices interrupt handler takes 5 time units to execute. Show what interrupt...
-
Provide examples of how each of the following can occur in a typical program: a. compulsory miss b. capacity miss c. conflict miss
Study smarter with the SolutionInn App