2. Painting of and lettering on truck immediately upon purchase 3. Installation and testing of factory machinery E9-2 Petrino Company incurred the following costs. 1. Sales tax on factory machinery purchased 4. Real estate broker's commission on land purchased 5. Insurance premium paid for first year's insurance on new truck 6. Cost of landscaping on property purchased $ 5,000 700 2,000 3,500 880 7,200 7. Cost of paving parking lot for new building constructed 17,900 8. Cost of clearing, draining, and filling land 9. Architect's fees on self-constructed building 13,300 10,000 Instructions Indicate to which account Petrino would debit each of the costs. Determine property, plant, and equipment costs. (LO 1), C 486 chapter 9 Reporting and Analyzing Long-Lived Assets Determine acquisition costs of land. (LO 1), AP Understand depreciation concepts. (LO 2), C E9-3 On March 1, 2014, Zobrist Company acquired real estate, on which it planned to construct a small office building, by paying $80,000 in cash. An old warehouse on the property was demolished at a cost of $8,200; the salvaged materials were sold for $1,700. Additional expenditures before construction began included $1,900 attorney's fee for work concerning the land purchase, $5,200 real estate broker's fee, $9,100 architect's fee, and $14,000 to put in driveways and a parking lot. Instructions (a) Determine the amount to be reported as the cost of the land. (b) For each cost not used in part (a), indicate the account to be debited. E9-4 Melissa Adduci has prepared the following list of statements about depreciation. 1. Depreciation is a process of asset valuation, not cost allocation. 2. Depreciation provides for the proper matching of expenses with revenues. 3. The book value of a plant asset should approximate its fair value. 4. Depreciation applies to three classes of plant assets: land, buildings, and equipment. 5. Depreciation does not apply to a building because its usefulness and revenue-producing ability generally remain intact over time. 6. The revenue-producing ability of a depreciable asset will decline due to wear and tear and to obsolescence. 7. Recognizing depreciation on an asset results in an accumulation of cash for replace- ment of the asset. 8. The balance in accumulated depreciation represents the total cost that has been charged to expense since placing the asset in service. 9. Depreciation expense and accumulated depreciation are reported on the income statement. 10. Four factors affect the computation of depreciation: cost, useful life, salvage value, and residual value. Instructions Identify each statement as true or false. If false, indicate how to correct the statement