Question

please help with these accouting questions!

IV ab X X APA 1 Styles Styles Pane Sensiti 7. Burke Company purchases land for $180,000 cash. Burke assumes $5,000 in property taxes due on the land. The title and attorney fees totaled $2,000. Burke has the land graded for $4,400. They paid $20,000 for paving of a parking lot. What amount does Burke record as the cost for the land? A) $186,400. B) $211,400 C) $191,400 D) $180,000. 8. Ramirez Company acquires land for $240,000 cash. Additional costs are as follow. Removal of shed $ 2,000 Filling and grading 6,000 Salvage value of lumber of shed 1,280 Broker commission 4,520 Paving of parking lot 40,000 Closing costs 3,400 Ramirez will record the acquisition cost of the land as A) $254,640. B) $257,200 C) $255,920. D) $240,000. 9. Kathy's Blooms purchased a delivery van with a $60,000 list price. The company was given a $6,000 cash discount by the dealer, and paid $3,000 sales tax. Annual insurance on the van is $1,500. As a result of the purchase, by how much will Kathy's Blooms increase its van account? A) $60,000. B) $54,000. C) $58,500 D) $57,000. 10. The book value of an asset is equal to the A) asset's fair value less its historical cost. B) blue book value relied on by secondary markets. C) replacement cost of the asset. D) asset's cost less accumulated depreciation. 2 words x English (United States) Focus EEE -

Answer 1

Whenever we purchase any fixed asset be it LAND , BUILDING or PLANT & MACHINERY etc, one thing to be always kept in mind while determining it's value is that Value of asset is not simply it's cost but all other expenses that are incurred to bring the asset to it's present location and condition where it can be put to use for the intended purpose.
They should be such costs that if not incurred than asset won't be of use. Keep this is mind for all FIXED ASSET cost determination. Using this concept we answer the following Questions

(7)

Computation of Cost of Land to be recorded

Particulars	Amount
Purchase Price	$180000
Add: Property Tax	$5000
Add: Title and Attorney fees	$2000
Add: Land Grading cost	$4400
Total Cost of Land	$191400

(8)

Statement showing Acquisition cost of Land

Particulars	Amount
Purchase Price	$240000
Add: Removal of Shed	$2000
Add: Filling and Grading	$6000
Less: Salvage value of Lumber of Shed	($1280)
Add: Broker commission	$4520
Add: Closing costs	$3400
Acquisition cost of land	$ 254640

(9)

Computation of Increase in Van Account

Particulars	Amount
List Price	$60000
Less: Cash Discount	($6000)
Add: Sales Tax	$3000
(Annual insurance is a revenue cost and will not be included in cost)	-
Total Increase in Van Account	$57000

(10)

The book Value of an asset is equal to - asset's cost less accumulated depreciation