Recognizing and Classifying the Cost of Long-term Assets Fraser Manufacturing pu

Question

Recognizing and Classifying the Cost of Long-term Assets

Fraser Manufacturing purchased land next to its factory to be used as a parking lot. The following expenditures were incurred by the company: purchase price, $299,000; broker's fees, $24,900; title search and other fees, $2,200; demolition of a cottage on the property, $8,000; general grading of property, $4,200; paving parking lots, $38,500; lighting for parking lots, $33,000; and signs for parking lots, $6,400.

Determine the amounts that should be debited to the Land account and the Land Improvements account.

Land account:----------------------- $   Land Improvements account:-----------------------

Explanation / Answer

Purchase price

299000

broker fees

24900

title search and other fees

2200

demolition of a cottage on the property

8000

general grading of property

4200

land account

338300

Land improvement account

paving parking lots

38500

lighting for parking lots

33000

lighting for parking lots

6400

total of land improvement account

77900

Purchase price

299000

broker fees

24900

title search and other fees

2200

demolition of a cottage on the property

8000

general grading of property

4200

land account

338300

Land improvement account

paving parking lots

38500

lighting for parking lots

33000

lighting for parking lots

6400

total of land improvement account

77900

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