Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
At December 31, 2011, certain accounts included in the property, plant, and equipment section of Reagan Companys balance sheet had the following balances. Land $238,340
At December 31, 2011, certain accounts included in the property, plant, and equipment section of Reagan Companys balance sheet had the following balances. Land $238,340 Buildings 909,260 Leasehold improvements 661,230 Equipment 882,630 During 2012, the following transactions occurred. 1. Land site number 621 was acquired for $851,790. In addition, to acquire the land Reagan paid a $53,350 commission to a real estate agent. Costs of $39,750 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $18,390. 2. A second tract of land (site number 622) with a building was acquired for $423,450. The closing statement indicated that the land value was $306,130 and the building value was $117,320. Shortly after acquisition, the building was demolished at a cost of $43,670. A new building was constructed for $337,920 plus the following costs. Excavation fees $41,800 Architectural design fees 14,900 Building permit fee 3,060 Imputed interest on funds used during construction (stock financing) 8,960 The building was completed and occupied on September 30, 2012. 3. A third tract of land (site number 623) was acquired for $652,700 and was put on the market for resale. 4. During December 2012, costs of $95,380 were incurred to improve leased office space. The related lease will terminate on December 31, 2014, 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 a royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was $85,090, freight costs were $3,630, installation costs were $3,030, and royalty payments for 2012 were $18,140. Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2012. Disregard the related accumulated depreciation accounts. Balance at December 31, 2012 Land $ Buildings $ Leasehold improvements $ Equipment $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started