Question

Discuss the financial statement for the purchase of a building. What items will be included in the financial statement?

Answer 1

Financial statements are the statements that show the financial performance and position of the entity. Financial statements include,

a) Income statement

b) Balance sheet

c) Statements of change in equity

d) Cash flow statement

e) Footnotes.

The building is considered as an asset of the entity under which operations of the entity are carried out. All the assets and liabilities are contained by the balance sheet of the entity so the building is reported in the balance sheet and the following costs are also included under the cost of building:

a) Purchase price

b) Legal costs

c) Repair and remodeling costs

d) Real estate commission

e) Unpaid taxes

Items included in the financial statements are shown below:

a) Assets

b) Liabilities

c) Shareholder's equity

d) Revenues

e) Expenses