Question
At December 31, 2013, certain accounts included in the property, plant, and equipment section of Reagan Companys balance sheet had the following balances. Land $238,680
At December 31, 2013, certain accounts included in the property, plant, and equipment section of Reagan Companys balance sheet had the following balances.
| Land | $238,680 |
| Buildings | 896,880 |
| Leasehold improvements | 664,210 |
| Equipment | 879,930 |
During 2014, the following transactions occurred.
| 1. | Land site number 621 was acquired for $850,590. In addition, to acquire the land Reagan paid a $52,970commission to a real estate agent. Costs of $41,030were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $18,760. |
| 2. | A second tract of land (site number 622) with a building was acquired for $421,610. The closing statement indicated that the land value was $307,830and the building value was $113,780. Shortly after acquisition, the building was demolished at a cost of $49,270. A new building was constructed for $339,590plus the following costs. |
| Excavation fees | $45,350 |
| Architectural design fees | 16,890 |
| Building permit fee | 2,700 |
| Imputed interest on funds used during construction (stock financing) | 8,880 |
The building was completed and occupied on September 30, 2014.
| 3. | A third tract of land (site number 623) was acquired for $658,630and was put on the market for resale. |
| 4. | During December 2014, costs of $92,920were incurred to improve leased office space. The related lease will terminate on December 31, 2016, 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 $85,480, freight costs were $4,030, installation costs were $3,330, and royalty payments for 2014 were $18,360. |
(a)
Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2014. Disregard the related accumulated depreciation accounts.
| Balance at December 31, 2014 | |
| Land | $ |
| Buildings | $ |
| Leasehold improvements | $ |
| Equipment | $ |
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Financial Reporting and Analysis
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
6th edition
9780077632182, 78025672, 77632184, 978-0078025679
