Question 3 At December 31, 2016, certain accounts included in the property, plan
ID: 2392809 • Letter: Q
Question
Question 3 At December 31, 2016, certain accounts included in the property, plant, and equipment section of Sheffield Company's balance sheet had the following balances. Land Buildings $232,600 902,100 663,300 883,000 During 2017, the following transactions occurred. 1. Land site number 621 was acquired for $853,000. In addition, to acquire the land Sheffield paid a $54,300 commission to a real estate agent. Costs of $37,800 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $17,300 2. A second tract of land (site number 622) with a building was acquired for $420,600. The closing statement indicated that the land value was $301,400 and the building value was $119,200. Shortly after acquisition, the building was demolished at a cost of $41,100. A new building was constructed for $327,100 plus the following costs. Excavation fees Architectural design fees Building permit fee Imputed interest on funds used during construction (stock financing) $37,700 11,000 2,500 8,500 The building was completed and occupied on September 30, 2017 3. A third tract of land (site number 623) was acquired for $655,700 and was put on the market for resale. 4. During December 2017, costs of $88,700 were incurred to improve leased office space. The related lease will terminate on December 31, 2019, and is not expected to be renewed. (Hint: Leasehold improvements should be handled in the same manner as land improvements.) 5. A group of new machines was purchased under royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was $86,800, freight costs were $3,300, installation costs were $2,400, and royalty payments for 2017 were 17,600.Explanation / Answer
Analysis of Land Account for 2017
Balance at January 1, 2017....... $232600
Land site number 621
Acquisition cost....... $850,300
Commission to real estate agent.... 54300
Clearing costs......... $37800
Less: Amounts recovered......17300 20500
Total land site number 621....... 962900
Land site number 622
Land value..... 301,400
Building value.... 119200
Demolition cost...... 41100
Total land site number 622.........461700
Balance at December 31, 2017 $1657200
Analysis of Building Account for 2017
Balance, January 1, 2017.......... 902100
Cost of new building constructed on land site number 622 Construction Costs...... $327100
Excavation fees....... 37700
Architectural design fees..... 11,000
Building permit fee........ 2,500 $378300
Total building (902100+378300)......1280400
Analysis of Leasehold Account for 2017
Balance, January 1, 2017.......... $663300
Office Space............. 88700
Balance at December 31, 2017.... $752000
Analysis of Machinery & Equipment Account for 2017
Balance, January 1, 2017....... $883,000
Cost of the new machines acquired Invoice Price... $86800 Freight Costs...... 3,300
Installation Costs..... 2,400 92,500
Balance at December 31, 2017 $975500
Land 1657200 Buildings 1280400 Leasehold improvements 752000 Equipment 975500Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.