AC 302 CHAPTER 10 QUESTION 2

AC 302 CHAPTER 10 QUESTION 2
Name				Date		
Instructor				 Course		
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
E10-2 (Acquisition Costs of Realty) Pollachek Co. purchased land as a factory site for						
$450,000 	. The process of tearing down two old buildings on the site and constructing the 					
factory required 6 months. The company paid				$42,000 	to raze the old buildings and 	
sold salvaged lumber and brick for 			$6,300 	. Legal fees of		$1,850 
were paid for title investigation and drawing the purchase contract. Pollachek paid 						$2,200 
to an engineering firm for a land survey, and			$65,000 	for drawing the factory plans. The land 		
survey had to be made before definitive plans could be drawn. Title insurance on the property cost						
$1,500 	, and a liability insurance premium paid during construction was					$900 
The contractor- charge for construction was			$2,740,000 	. The company paid the contractor in two 		
installments:	$1,200,000 	at the end of three months and			$1,540,000 	upon 
completion. Interest costs of		$170,000 	were incurred to finance the construction.			
						
Instructions:						
Determine the cost of the land and the cost of the building as they should be recorded on the books of Pollachek Co. Assume that the land survey was for the building.						
						
						
			Land	Building		
	Text Title		Amount			
	Text Title		Amount			
	Less: Salvage		Amount			
	Text Title		Amount			
	Text Title			Amount		
	Text Title			Amount		
	Text Title		Amount			
	Text Title			Amount		
	Text Title			Amount		
	Text Title			Amount		
			Formula	Formula