Question : 157. Identify each of the following expenditures as chargeable to (a) : 1227261

 

157. Identify each of the following expenditures as chargeable to (a) Land, (b) Land Improvements, (c) Buildings, (d) Machinery and Equipment, or (e) other account. 

(1)

Cost of paving parking area for employees and customers.

(2)

Insurance during construction of building.

(3)

Interest incurred on loan during construction of building.

(4)

Fee paid for installation of equipment.

(5)

Special foundation for new equipment acquired.

(6)

Insurance on new equipment while in transit.

(7)

Freight charges on new equipment.

(8)

Cost of repairing vandalism damage to equipment during installation.

(9)

Sales tax on new equipment.

(10)

Cost incurred in repairing damage resulting from installation of new equipment.

(11)

Cost of land fill for building site.

(12)

Cost of lubricating oil purchased for periodic oil changes for equipment.

(13)

Parking lot lighting.

(14)

Installing a fence around the parking lot.

(15)

Repainting the trim on a building.

(16)

Special assessment paid to city for extension of water main to property.

(17)

Cost of razing and removing the old building on property acquired for a building site.

(18)

Delinquent real estate taxes assumed by purchaser on property acquired for a building site.

(19)

Attorney’s fee for title search.

(20)

Architect’s fee for building plans and supervision of construction.

 

 

 

158. Identify the following as a Fixed Asset (FA), or Intangible Asset (IA), or Natural Resource (NR), or Neither (N) 

(a)

computer

(b)

patent

(c)

oil reserve

(d)

goodwill

(e)

U. S. Treasury note

(f)

land used for employee parking

(g)

gold mine

 

 

 

159. A number of major structural repairs completed at the beginning of the current fiscal year at a cost of $1,000,000 are expected to extend the life of a building 10 years beyond the original estimate.  The original cost of the building was $6,552,000, and it has been depreciated by the straight-line method for 25 years.  Estimated residual value is negligible and has been ignored.  The related accumulated depreciation account after the depreciation adjustment at the end of the preceding fiscal year is $4,550,000. 

(a)

What has the amount of annual depreciation been in past years?

(b)

What was the original life estimate of the building?

(c)

To what account should the $1,000,000 be debited?

(d)

What is the book value of the building after the extraordinary repairs have been made?

(e)

What is the expected remaining life of the building after the extraordinary repairs have been made?

(f)

What is the amount of straight-line depreciation for the current year, assuming that the repairs were completed at the very beginning of the current year? Round to the nearest dollar.

 

 

 

 

160. Journalize each of the following transactions: 

(a)

A wing costing $1,250,000 was added to the building.  A new mortgage was issued for the cost.

(b)

Equipment was upgraded to increase its capacity to produce widgets. The upgrade cost of $13,000 was paid in cash.

(c)

A major overhaul costing $7,000 on a machine increased the useful life by 2 years. The payment was made in cash.

 

 

 

 

 

161. XYZ Co. incurred the following costs related to the office building used in operating its sports supply company: 

a.

Replaced a broken window.

b.

Replaced the roof that had been on the building 23 years.

c.

Serviced all the air conditioners before summer started.

d.

Replaced the air conditioners with refrigerated air conditioners in the customer service areas.

e.

Added a warehouse to the back of the building.

f.

Repainted the interior walls.

g.

Installed window shutters on all windows.

 

 

Classify each of the costs as a capital expenditure or a revenue expenditure.  For those costs identified as capital expenditures, classify each as an additional or replacement component.