Here, the loss in the condemnation of the land is $9000, accounting assignment help

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P10-4 (LO1,4,6) GROUPWORK (Dispositions, Including Condemnation, Demolition, and Trade-In) Presented below is a schedule of property dispositions for Hollerith Co. Schedule of Property Dispositions Cost Accumulated Depreciation Cash Proceeds Fair Value Nature of Disposition $31,000 Condemnation — Demolition Land $40,000 — $31,000 Building 15,000 — 3,600 Warehouse 70,000 $16,000 Machine 8,000 2,800 Furniture 10,000 7,850 Automobile 9,000 3,460 74,000 74,000 900 7,200 Trade-in 3,100 Contribution 2,960 Sale — 2,960 Destruction by fire The following additional information is available. Land: On February 15, a condemnation award was received as consideration for unimproved land held primarily as an investment, and on March 31, another parcel of unimproved land to be held as an investment was purchased at a cost of $35,000. Building: On April 2, land and building were purchased at a total cost of $75,000, of which 20% was allocated to the building on the corporate books. The real estate was acquired with the intention of demolishing the building, and this was accomplished during the month of November. Cash proceeds received in November represent the net proceeds from demolition of the building. Warehouse: On June 30, the warehouse was destroyed by fire. The warehouse was purchased January 2, 2014, and had depreciated $16,000. On December 27, the insurance proceeds and other funds were used to purchase a replacement warehouse at a cost of $90,000. Machine: On December 26, the machine was exchanged for another machine having a fair value of $6,300 and cash of $900 was received. (The exchange lacks commercial substance.) Furniture: On August 15, furniture was contributed to a qualified charitable organization. No other contributions were made or pledged during the year. Automobile: On November 3, the automobile was sold to Jared Winger, a stockholder. Instructions Indicate how these items would be reported on the income statement of Hollerith Co. P10-6 (LO1,3) (Interest During Construction) Grieg Landscaping began construction of a new plant on December 1, 2017. On this date, the company purchased a parcel of land for $139,000 in cash. In addition, it paid $2,000 in surveying costs and $4,000 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $3,000, with $1,000 being received from the sale of materials. Architectural plans were also formalized on December 1, 2017, when the architect was paid $30,000. The necessary building permits costing $3,000 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor in 2018 as follows. Date of Payment Amount of Payment March 1 $240,000 May 1 330,000 July 1 60,000 The building was completed on July 1, 2018. To finance construction of this plant, Grieg borrowed $600,000 from the bank on December 1, 2017. Grieg had no other borrowings. The $600,000 was a 10-year loan bearing interest at 8%. Instructions Compute the balance in each of the following accounts at December 31, 2017, and December 31, 2018. (Round amounts to the nearest dollar.) (a)Land. (b)Buildings. (c)Interest Expense.
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Explanation & Answer

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Solution: 10-4
(a) Land: Here, the loss in the condemnation of the land is $9000 ($40000 - $31000). This
loss should be reported as the ‘extraordinary item’ in the income statement of Hollerith
Co. assuring that the event is unusual and infrequent. The purchasing of the land of
$35000 has no effect on the income statement.
(b) Building: Here, no gain or loss on the demolition of building. Thus, income statement
will not be affected. The purchased cost less demolition proceed ($15000 - $3600) will
have effect on the figure reported to ‘land’ in the balance sheet.
(c) Warehouse: The realized gain of $20000 for Warehouse destructed by fire will be
reported in the income statement as an ‘extraordinary item’ assuring that the event is
...


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