Problem - Learning Objectives - Measuring, depreciating, and reporting plant assets
During 2010, Chun Book Store paid $487,000 for land and built a store in Akron. Prior to construction, the city of Akron charged Chun $1,400 for a building permit, which Chun paid. Chun also paid $15,320 for architect's fees. The construction cost of $690,000 was financed by a long-term note payable, with interest cost of $28,300 paid at completion of the project. The building was completed September 30, 2010. Chun depreciates the building by the straight-line method over 35 years, with estimated residual value of $337,000.
1. Journalize transactions for
a. Purchase of the land
b. All the costs chargeable to the building in a single entry
c. Depreciation on the building
Explanations are not required.
2. Report Chun Book Store's plant assets on the company's balance sheet at December 31, 2010.
3. What will Chun's income statement for the year ended December 31, 2010, report for this situation?