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AC301 Unit 1 Assignment – Wiley

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Please watch this short video (2 minutes) to ensure your success on the Wiley Plus Assignments. Exercise 10-2 Exercise 10-17 Exercise 10-23 Exercise 10-2 Martin Buber Co. purchased land as a factory site for $854,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months. The company paid $89,670 to raze the old buildings and sold salvaged lumber and brick for $13,451. Legal fees of $3,950 were paid for title investigation and drawing the purchase contract. Martin Buber paid $4,697 to an engineering firm for a land survey, and $145,180 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $3,203, and a liability insurance premium paid during construction was $1,922. The contractor’s charge for construction was $5,849,900. The company paid the contractor in two installments: $2,562,000 at the end of 3 months and $3,287,900 upon completion. Interest costs of $362,950 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. Assume that the land survey was for the building. Cost of the Land $ Cost of the Building $ Exercise 10-17 Busytown Corporation, which manufactures shoes, hired a recent college graduate to work in its accounting department. On the first day of work, the accountant was assigned to total a batch of invoices with the use of an adding machine. Before long, the accountant, who had never before seen such a machine, managed to break the machine. Busytown Corporation gave the machine plus $610 to Dick Tracy Business Machine Company (dealer) in exchange for a new machine. Assume the following information about the machines. Busytown Corp. (Old Machine) Dick Tracy Co. (New Machine) Machine cost $521 $485 Accumulated depreciation 251 –0– Fair value 153 763 For each company, prepare the necessary journal entry to record the exchange. (The exchange has commercial substance.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Busytown Corporation Dick Tracy Business Machine Company Exercise 10-23 Your answer is correct. Plant assets often require expenditures subsequent to acquisition. It is important that they be accounted for properly. Any errors will affect both the balance sheets and income statements for a number of years. For each of the following items, indicate whether the expenditure should be capitalized or expensed in the period incurred. Items (a) Improvement. (b) Replacement of a minor broken part on a machine. (c) Expenditure that increases the useful life of an existing asset. (d) Expenditure that increases the efficiency and effectiveness of a productive asset but does not increase its salvage value. (e) Expenditure that increases the efficiency and effectiveness of a productive asset and increases the asset’s salvage value. (f) Expenditure that increases the quality of the output of the productive asset. (g) Improvement to a machine that increased its fair market value and its production capacity by 30% without extending the machine’s useful life. (h) Ordinary repairs. Click if you would like to Show Work for this question: Open Show Work

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