1,700 To record prepaid insurance for the machine:. Prepaid insurance...[r]
(1)Exercise 10–1
Capitalized cost of land:
Purchase price ………$60,000 Demolition of old building ………$4,000
Less: Sale of materials ……… (2,000)………… 2,000 Legal fees for title investigation……… 2,000 Total cost of land……… $64,000
Capitalized cost of building:
Construction costs ……… $500,000 Architect's fees ……… 12,000 Interest on construction loan ………5,000 Total cost of building ……….$517,000
Note: Property taxes on the land for the period after acquisition are not part of acquisition cost They are expensed in the period incurred
Exercise 10–2
To record the purchase of a machine:
Machine ($45,000 + 2,200 + 700 + 1,000) 48,900
Accounts payable 47,200 Cash 1,700 To record prepaid insurance for the machine: