treatment of various costs 457663

(Treatment of Various Costs)

Allegro Supply Company, a newly formed corporation, incurred the following expenditures related to Land, to Buildings, and to Machinery and Equipment.

Abstract company’s fee for title search $ 520

Architect’s fees 3,170

Cash paid for land and dilapidated building thereon 92,000

Removal of old building $20,000

Less: Salvage 5,500

14,500

Interest on short term loans during construction 7,400

Excavation before construction for basement 19,000

Machinery purchased (subject to 2% cash discount,

which was not taken) 65,000

Freight on machinery purchased 1,340

Storage charges on machinery, necessitated by

noncompletion of building when machinery was 2,180

delivered

New building constructed (building construction took 6

months from date of purchase of land and old building) 485,000

Assessment by city for drainage project 1,600

Hauling charges for delivery of machinery from storage to

new building 620

Installation of machinery 2,000

Trees, shrubs, and other landscaping after completion of

building (permanent in nature) 5,400

Determine the amounts that should be debited to Land, to Buildings, and to Machinery and Equipment. Assume the benefits of capitalizing interest during construction exceed the cost of implementation. (If answer is zero, please enter 0, do not leave any fields blank.)

Land Buildings Machinery & Equipment Other

Abstract fee $ $ $ $

Architect’s fees

Cash paid for land and old building

Removal of old building

Interest on loans during construction

Excavation before construction

Machinery purchased

Freight on machinery

Storage charges caused by noncompletion of building

New building

Assessment by city

Hauling charges machinery

Installation machinery

Landscaping

$

$

$

$

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