ACC 304 All Assignments ACC 304 All Assignments | Page 101

4) Martin Buber co. purchased land as a factory site for $400,000.
The process of tearing down two old buildings on the site and
constructing the factory required 6 months. The company paid $42,000
to raze the old buildings and salvaged lumber and brick for $6,300.
Legal fees of $1,850 were paid for title investigation and drawing the
purchase contract. Martin Buber paid $2,200 to an engineering firm for
a land survey, and $68,000 for drawing the factory plans. The land
survey had to be made before definitive plans could be drawn. Title
insurance on the property cost $1,500, and a liability insurance
premium paid during construction was $900. The contractor’s charge
for construction was $2,740,000. The company paid the contractor in
two installments:$1,200,000 at the end of 3 months and $1,540,000
upon completion. Interest costs of $170,000 were incurred to finance
the construction. Determine the cost of the land and the cost of the
building as they should be recorded on the books of Martin Buberk Co.
assumes that the land survey was for the building.
5) Ben Sisko Supply Company, a newly formed corporation, incurred
the following expenditure related to land, to Buildings, and to
machinery and equipment. 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.
6) On December 31, 2013, Main Inc. borrowed $3,000,000 at 12%
payable annually to finance the construction of a new building. In 2014,
the company made the following expenditures related to this building:
March 1, $360,000; June 1, $600,000;$1,500,000; December 1,
$1,500,000. The building was completed in February 2015. Additional
information is provided as follows.