Asked by Yanna Listana on Apr 25, 2024
A company needed a new building.It found a suitable location with an existing old building on the land.The company reached an agreement to buy the land and the building for $960,000 cash.The old building was demolished to make way for the needed new building.Following is information regarding the demolition of the old building and construction of the new one:
Construction cost of new building $8,900,000
Cost for parking lot……………………………………….$260,000
Demolition of old building…………………………… 200,000
Proceeds from sale of salvaged materials from old building 70,000
Prepare a single journal entry to record the above costs assuming all transactions are paid in cash.
Construction Cost
Expenses incurred in the building of physical structures, including materials, labor, and overhead costs.
Parking Lot
A parking lot is a designated area or facility for parking vehicles, often paved and marked for individual spaces.
Salvaged Materials
Items recovered from waste or by-products that can be reused, recycled, or sold, often contributing to cost savings or additional income.
- Contrast the accounting approaches for capital expenditures with those for revenue expenditures.
Learning Objectives
- Contrast the accounting approaches for capital expenditures with those for revenue expenditures.