AC 302 CHAPTER 10 PROBLEM QUESTION 1

AC 302 CHAPTER 10 PROBLEM QUESTION 1
Name				Date	
Instructor				Course	
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
P10-1 (Classification of Acquisition and Other Asset Costs) At December 31, 2011, certain accounts included in the property, plant, and equipment section of Reagan Company- balance sheet had the following balances.						
						
						
	Land			$230,000 		
	Buildings			$890,000 		
	Leasehold improvements			$660,000 		
	Machinery and equipment			$875,000 		
						
During 2012 the following transactions occurred:						
1. Land site number 621 was acquired for			$850,000 	In addition, to acquire the land Reagan paid a		
$51,000 	commission to a real estate agent. Costs of				$35,000 	were incurred
to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for						
$13,000 						
2. A second tract of land (site number 622) with a building was acquired for						$420,000 
The closing statement indicated that the land value was				$300,000 	and the building value was	
$120,000 	Shortly after acquisition, the building was demolished at a cost of					$41,000 
A new building was constructed for			$330,000 	plus the following costs:		
	Excavation fees				$38,000 	
	Architectural design fees				$11,000 	
	Building permit fees				$2,500 	
	"Imputed interest on funds used during
       construction (Stock financing)"				$8,500 	
						
The building was completed and occupied on September 30, 2012.						
3. A third tract of land (site number 623) was acquired for				$650,000 	and was put on the market	
for resale.						
4. During December 2012, costs of			$89,000 	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						
						
$87,000 	freight costs were		$3,300 	installation costs were		$2,400 
and royalty payments for 2010 were			$17,500 			
						
Instructions:						
(a) Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2012:						
						
	Land		Leasehold Improvements			
	Buildings		Machinery and Equipment			
Disregard the related accumulated depreciation accounts.						
						
REAGAN COMPANY						
Analysis of Land Account for 2012						
Balance, January 1, 2012						Amount
Land site number 621						
Text Title					Amount	
Text Title					Amount	
Text Title				Amount		
Text Title				Amount	Formula	
Total land site number 621						Formula
						
Land site number 622						
Text Title					Amount	
Text Title					Amount	
Text Title					Amount	
Total land site number 622						Formula
Balance at December 31, 2012						Formula
						
REAGAN COMPANY						
Analysis of Building Account for 2012						
Balance, January 1, 2012						
Cost of new building constructed on land site number 622						Amount
Text Title					Amount	
Text Title					Amount	
Text Title					Amount	
Text Title					Amount	Formula
Balance at December 31, 2012						Formula
						
REAGAN COMPANY						
Analysis of Leasehold Account for 2012						
Balance, January 1, 2012						Amount
Text Title						Amount
Balance at December 31, 2012						Formula
						
REAGAN COMPANY						
Analysis of Machinery & Equipment Account for 2012						
Balance, January 1, 2012						Amount
Cost of the new machines acquired						
Text Title					Amount	
Text Title					Amount	
Text Title					Amount	Formula
Balance at December 31, 2012						Formula
						
"(b) List the items in the situation that were not used to determine the answer to (a) above, and indicate
     where, or if, these items should be included in Reagan's financial statements."						
						
						
Enter text answer as appropriate.						
						
						
Enter text answer as appropriate.						
						
						
Enter text answer as appropriate.