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$3,000,000 on December 31. Compute Hanson’s weighted-average
accumulated expenditure for interest capitalization purposes.
2) Mehta Company traded a used welding machine (cost $9,000,
accumulated depreciation $3,000) for office equipment with an
estimated fair value of $5,000. Mehta also paid $3,000 cash in the
transaction. Prepare the journal entry to record the exchange.
3) Ottawa Corporation owns machinery that cost $20,000 when
purchased on July 1, 2011. Depreciation has been recorded at a rate
of $2,400 per year, resulting in a balance is accumulated
depreciation of $8,400 at December 31, 2014. The machinery is sold
on September 1, 2015, for $10,500. Prepare journal entries to (a)
update depreciation for 2015 and (b) record the sale.
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