Reference no: EM132451551
Problem - Classification of Land and Building Costs
Spitfire Company was incorporated on January 2, 2015, but was unable to begin manufacturing activities until July 1, 2015, because new factory facilities were not completed until that date.
The Land and Buildings account reported the following items during 2015.
|
January 31
|
Land and buildings
|
$160,000
|
|
February 28
|
Cost of removal of building
|
9,800
|
|
May 1
|
Partial payment of new construction
|
60,000
|
|
May 1
|
Legal fees paid
|
3,770
|
|
June 1
|
Second payment on new construction
|
40,000
|
|
June 1
|
Insurance premium
|
2,280
|
|
June 1
|
Special tax assessment
|
4,000
|
|
June 30
|
General expenses
|
36,300
|
|
July 1
|
Final payment on new construction
|
30,000
|
|
December 31
|
Asset write-up
|
53,800
|
|
|
399,950
|
|
December 31
|
Depreciation-2015 at 1%
|
(4,000)
|
|
December 31, 2015
|
Account balance
|
$395,950
|
The following additional information is to be considered.
1. To acquire land and building, the company paid $80,000 cash and 800 shares of its 8% cumulative preferred stock, par value $100 per share. Fair value of the stock is $117 per share.
2. Cost of removal of old buildings amounted to $9,800, and the demolition company retained all materials of the building.
3. Legal fees covered the following.
|
Cost of organization
|
$610
|
|
Examination of title covering purchase of land
|
1,300
|
|
Legal work in connection with construction contract
|
1,860
|
|
$3,770
|
4. Insurance premium covered the building for a 2-year term beginning May 1, 2015.
5. The special tax assessment covered street improvements that are permanent in nature.
6. General expenses covered the following for the period from January 2, 2015, to June 30, 2015.
|
President's salary
|
$32,100
|
|
Plant superintendent's salary-supervision of new building
|
4,200
|
|
$36,300
|
7. Because of a general increase in construction costs after entering into the building contract, the board of directors increased the value of the building $53,800, believing that such an increase was justified to reflect the current market at the time the building was completed. Retained earnings was credited for this amount.
8. Estimated life of building-50 years. Depreciation for 2015-1% of asset value (1% of $400,000, or $4,000).
Required -
1. Prepare entries to reflect correct land, buildings, and depreciation accounts at December 31, 2015.
2. Show the proper presentation of land, buildings, and depreciation on the balance sheet at December 31, 2015.
|
Explain the estimate the sales growth rate for the company
: Estimate the sales growth rate for the company for the next annual accounting period. Explain each step of your estimation process.
|
|
What is La More net income using cash basis accounting
: Collected $2,000 for services to be performed in 2014. What is La More's 2013 net income using cash basis accounting
|
|
Discuss methods of evaluation of the learning experience
: Discuss Methods of Evaluation of the Learning Experience,How this Independent Study will Help the Student Meet Those Goals
|
|
Calculation and interpretation of the mean
: Discussion, calculation, and interpretation of the mean, median, mode, range, standard deviation, and variance.Explanation of the full hypothesis test.
|
|
Problem - Classification of Land and Building Costs
: Problem - Classification of Land and Building Costs. Prepare entries to reflect correct land, buildings, and depreciation accounts at December 31, 2015
|
|
What is the company doing in the ibpms space
: What is your company doing in the iBPMS space? Are they a niche market - serving only a specific customer base? Are they a public company (Stock Price)
|
|
Identified the organizations swot
: Explain why this opportunity/threat was selected, and how it is anticipated to benefit the organization. Identified the organizations SWOT
|
|
Prepare the journal entry necessary to record the change
: Prepare the journal entry necessary to record the change in 2015 and show net income reported for 2012, 2013, 2014, and 2015
|
|
Examine the potential impact of time-driven abc costing
: Discuss how a time driven ABC cost system can be implemented in the company you researched and the benefits that the use will yield to the business performance.
|