question archive During the current year, Dauntless Company had the following transactions pertaining to the new office building: Purchase price of land as a building site 600,000 Legal fees for contract to purchase land 20,000 Architect fee 80,000 Demolition of old building 50,000 Sale of scrap from old building 30,000 Construction cost of new building 3,500,000 Question 1: What amount should be reported for land? 600,000 620,000 640,000 670,000 Question 2: What amount should be reported for building? 3,520,000 3,600,000 3,500,000 3,620,000
During the current year, Dauntless Company had the following transactions pertaining to the new office building: Purchase price of land as a building site 600,000 Legal fees for contract to purchase land 20,000 Architect fee 80,000 Demolition of old building 50,000 Sale of scrap from old building 30,000 Construction cost of new building 3,500,000 Question 1: What amount should be reported for land? 600,000 620,000 640,000 670,000 Question 2: What amount should be reported for building? 3,520,000 3,600,000 3,500,000 3,620,000
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During the current year, Dauntless Company had the following transactions pertaining to the new office building:
|
Purchase price of land as a building site |
600,000 |
|
Legal fees for contract to purchase land |
20,000 |
|
Architect fee |
80,000 |
|
Demolition of old building |
50,000 |
|
Sale of scrap from old building |
30,000 |
|
Construction cost of new building |
3,500,000 |
Question 1: What amount should be reported for land?
|
600,000 |
||
|
620,000 |
||
|
640,000 |
||
|
670,000 |
||
Question 2: What amount should be reported for building?
|
3,520,000 |
||
|
3,600,000 |
||
|
3,500,000 |
||
|
3,620,000 |
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Answer:
1.
Amount to be reported for land
= purchase price of land + legal fees for contract to purchase the land
= 600,000 + 20,000
= 620,000.
Hence, option (2) 620,000 is correct.
2.
Amount to be reported for building
= construction cost of new building + Architect fees + Demolition of old building - scrap value of old building
= 3,500,000 + 80,000 + 50,000 - 30,000
= 3,600,000.
Hence, option (2) 3,600,000 is correct.
