E10-1 (Acquisition Costs of Realty) The following expenditures and receipts are related to land, land im- provements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses.;(a)Money borrowed to pay building contractor (signed a note) (b)Payment for construction from note proceeds (c)Cost of land fill and clearing (d)Delinquent real estate taxes on property assumed by purchaser (e)Premium on 6-month insurance policy during construction;(f)Refund of 1-month insurance premium because construction completed early (g)Architect?s fee on building (h)Cost of real estate purchased as a plant site (land $200,000 and building $50,000) (i)Commission fee paid to real estate agency;(j)Installation of fences around property (k)Cost of razing and removing building (l)Proceeds from salvage of demolished building (m)Interest paid during construction on money borrowed for construction (n)Cost of parking lots and driveways (o)Cost of trees and shrubbery planted (permanent in nature) (p)Excavation costs for new building;Instructions;$(275,000) 275,000 8,000 7,000 6,000;(1,000) 22,000 250,000 9,000 4,000 11,000;(5,000) 13,000 19,000 14,000;3,000;Identify each item by letter and list the items in columnar form, using the headings shown below. All receipt amounts should be reported in parentheses. For any amounts entered in the Other Accounts column, also indicate the account title.;Other Item Land LandImprovements Buildings Account;10-7 (Capitalization of Interest) Harrisburg Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $5,000,000 on January 1, 2014. Harrisburg expected to complete the building by December 31, 2014. Harrisburg has the following debt obligations outstanding during the construction period.;Construction loan?12% interest, payable semiannually, issued December 31, 2013;Short-term loan?10% interest, payable monthly, and principal payable at maturity on May 30, 2015;Long-term loan?11% interest, payable on January 1 of each year. Principal payable on January 1, 2018;$2,000,000 1,400,000 1,000,000;(a) Assume that Harrisburg completed the office and warehouse building on December 31, 2014, as planned at a total cost of $5,200,000, and the weighted-average amount of accumulated expendi- tures was $3,600,000. Compute the avoidable interest on this project.;(b) Compute the depreciation expense for the year ended December 31, 2015. Harrisburg elected to depreciate the building on a straight-line basis and determined that the asset has a useful life of 30 years and a salvage value of $300,000.;P10-8 (Nonmonetary Exchanges) Holyfield Corporation wishes to exchange a machine used in its opera-;tions. Holyfield has received the following offers from other companies in the industry.;1.Dorsett Company offered to exchange a similar machine plus $23,000. (The exchange has commer- cial substance for both parties.);2.Winston Company offered to exchange a similar machine. (The exchange lacks commercial substance for both parties.);3.Liston Company offered to exchange a similar machine, but wanted $3,000 in addition to Holyfield?s machine. (The exchange has commercial substance for both parties.);In addition, Holyfield contacted Greeley Corporation, a dealer in machines. To obtain a new machine, Holyfield must pay $93,000 in addition to trading in its old machine.;Machinecost Accumulated depreciation Fair value;Instructions;HolyfieldDorsettWinstonListonGreeley;$160,000 $120,000 $152,000 $160,000 $130,000 60,00045,00071,00075,000?0? 92,00069,00092,00095,000185,000;nstructions;(a)Assuming that the exchange of Assets A and B has commercial substance, record the exchange for both Hyde, Inc. and Wiggins, Inc. in accordance with generally accepted accounting principles. (b)Assuming that the exchange of Assets A and B lacks commercial substance, record the exchange for both Hyde, Inc. and Wiggins, Inc. in accordance with generally accepted accounting principles.
Paper#74141 | Written in 18-Jul-2015Price : $22