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Burkina Ltd. is expanding its operations. Due to the expansion, they incurred the following costs during the fiscal period when they constructed a new factory:

Burkina Ltd. is expanding its operations. Due to the expansion, they incurred the following costs during the fiscal period when they constructed a new factory: Direct labour 70,000 Loan Interest to finance expansion 3,000 Architectural drawings 15,000 Purchase of company car for the new plant manager 44,000 Direct material for factory 81,000 Allocation of overhead based on labour hours worked on factory 58,000 Imputed interest on lost opportunity costs 9,000 Instructions Which of these costs should be included in the cost of the new factory?

Question 2 Aden Motels Inc. owns a motel that it had purchased on January 1, 2014 for $1.5 Million cash and is accounted for in a separate account, classified as "Structures." The company is using the revaluation model to account for its structures and revalues them every three years. Aden uses straight-line depreciation over the asset's 15-year useful life with no residual value. The asset's fair values were as follows: Dec 31, 2016: $1,450,000. Instructions a. Assuming Aden uses the asset adjustment (elimination) method for revaluation, prepare all required journal entries for 2014, 2015, 2016 and 2017. b. Assume instead that the value of the structure was $1,000,000 at the end of 2016 and there is a credit balance of 150,000 in the revaluation surplus account, record the journal entry for the revaluation and the 2017 depreciation. What happens if the structure increases in value at the next revaluation date?

Question Three Bahrain Corporation follows a policy of a 10% depreciation charge per year on machinery and a 5% depreciation charge per year on buildings. The following transactions occurred in 2014: March 31, 2014 A warehouse which Bahrain had purchased on January 1, 2005 for $1.7 million (with a current fair value of $1 million) was exchanged for another warehouse which also had a current fair value of $1 million. Depreciation has been properly charged from Jan 1, 2005 through Dec 31, 2013. Both parcels of land on which the warehouses were located were equal in value, and had a fair value equal to book value. June 30, 2014 Machinery with a cost of $120,000 and accumulated depreciation through December 31, 2013 of $90,000 was exchanged, along with $75,000 cash, for a parcel of land with a fair market value of $115,000. Instructions Prepare all appropriate journal entries for Bahrain Corporation for the above dates.

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