Question

January 2010, Giant Green Company pays $3,000,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $742,000, with a useful life of 25 years and a $75,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $400,500 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $2,020,600, Giant Green also incurs the following additional costs: Cost to demolish Building 1 $ 400,200 Cost of additional land grading 200,000 Cost to construct new building (Building 3), having a useful life of 25 years and a $322,000 salvage value 3,851,000 Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value 122,000 What is the amount that should be recorded for Building #2? Multiple Choice $742,000 $487,921 

          January 2010, Giant Green Company pays $3,000,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $742,000, with a useful life of 25 years and a $75,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $400,500 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $2,020,600, Giant Green also incurs the following additional costs:
Cost to demolish Building 1
$ 400,200
Cost of additional land grading
200,000
Cost to construct new building (Building 3), having a useful life of 25 years and a $322,000 salvage value
3,851,000
Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value
122,000
What is the amount that should be recorded for Building #2?
Multiple Choice
$742,000
$487,921
Show more…
January 2010, Giant Green Company pays 3,000,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at742,000, with a useful life of 25 years and a 75,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at400,500 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at 2,020,600, Giant Green also incurs the following additional costs: Cost to demolish Building 1 400,200 Cost of additional land grading 200,000 Cost to construct new building (Building 3), having a useful life of 25 years and a 322,000 salvage value 3,851,000 Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value 122,000 What is the amount that should be recorded for Building #2? Multiple Choice742,000 487,921

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Horngren’s Cost Accounting
Horngren’s Cost Accounting
Srikant M. Datar, Madhav V. Rajan 16th Edition
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Near Building 1 has improvements (Land Improvements valued at $400,500 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $2,020,600. Grant Green also incurs the following additional costs: - Cost to demolish Building: $400,200 - Cost of additional Land grading: $200,000 - Cost to construct new building (Building 3) having a useful life of 25 years and a $322,000 salvage value: $3,851,000 - Cost of new land improvements (Land Improvement 2) near Building 2 having a 20-year useful life and no salvage value: $122,000 What is the amount that should be recorded for Building? Multiple Choice: A) $742,000 B) $487,921
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Transcript

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00:01 Hello, in this video i'll be explaining the following.
00:03 So i have the information and we're going to do a single january entry for january.
00:09 And in order to do this, we're going to have to do some calculations first.
00:14 So let's go ahead and get started.
00:17 We're going to have to find the proportional purchase of building two.
00:21 So let's see the proportional for b2 purchase.
00:36 We know it's going to be our 2750 ,000 times our 796, 500 divided by our 2 ,9 ,400.
00:59 And that's going to equal our 7 ,4, 26, 26, 26, 2.
01:08 All right.
01:09 So next we're going to do the proportional purchase for the cost land.
01:18 And that's going to be our $750 ,000 times our $1740 ,000, divided by $29 ,000 ,000.
01:38 500 and that's going to give us 162 2309 and then we have to find the proportional purchase for the cost land improvement improvement one all right so that's going to be our 2750 times 416 ,000 divided by.
02:30 I'm going to move it down to 2949, 2950, 500, i mean.
02:45 And then that's going to equal 385 .060.
02:53 All right...
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