Question

Question 1 part A and B

A.Holiday Laboratories purchased a high-speed industrial centrifuge at a cost of $450,000. Shipping costs totaled $28,000. Foundation work to house the centrifuge cost $7,500. An additional water line had to be run to the equipment at a cost of $3,100. Labor and testing costs totaled $5,900. Materials used up in testing cost $2,500. The capitalized cost is:

Multiple Choice

• $497,000.

• $488,600.

• $495,900.

• $478,000.

B. On July 1, 2018, Larkin Co. purchased a $520,000 tract of land that is intended to be the site of a new office complex. Larkin incurred additional costs and realized salvage proceeds during 2018 as follows:

Demolition of existing building on site	$	71,000
Legal and other fees to close escrow		12,500
Proceeds from sale of demolition scrap		9,000

What would be the balance in the land account as of December 31, 2018?

Multiple Choice

• $603,500.

• $520,000.

• $594,500.

• $591,000.

Answer 1