The following expenditures relating to property, plant, and equipment were made by Bachinski Ltd.: 1. Paid $1.2

Question:

The following expenditures relating to property, plant, and equipment were made by Bachinski Ltd.:
1. Paid $1.2 million for a plant site.
2. Paid $8,000 of legal fees on the purchase of the plant site.
3. Paid $39,000 to demolish an old building on the plant site; residual materials were sold for $7,000.
4. Paid $55,000 for paving the parking lot on the plant site.
5. Paid $57,600 in architect fees for the design of the new plant.
6. Promised to pay $150,000 in restoration costs when the company is finished using the plant site.
7. Paid $80,000 for a new delivery truck.
8. Paid $3,000 to have the company name and advertising slogan painted on the new truck.
9. Paid a $400 motor vehicle licence fee on the new truck.
10. Paid $2,800 for a one-year accident insurance policy on the new truck.
Instructions
(a) Explain what types of expenditures should be included in determining the cost of property, plant, and equipment.
(b) List the numbers of the above transactions, and beside each number write the account title that the expenditure should be debited to.
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Accounting Tools for Business Decision Making

ISBN: 978-1119368458

7th Canadian edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine

Question Posted: