In: Accounting
C & M Securities made several expenditures during the
current fiscal year, including the following:
(a)
For each of the items listed below, indicate whether the cost
should be debited to land, buildings, equipment, land improvements,
or an expense account.
Amount | Description of Expenditure | |||||
1. | $150,000 | Acquisition of a piece of land to be used as a building site | Expense or Land improvementsLandBuildingExpenseLand improvementsNo effectEquipmentExpense or Buildings | |||
2. | 3,000 | Demolition of a small building on the land, to make way for the new building | Expense or BuildingsExpenseBuildingNo effectExpense or Land improvementsLandEquipmentLand improvements | |||
3. | 7,500 | Levelling of the land to prepare it for construction of the new building | BuildingEquipmentExpense or BuildingsLand improvementsNo effectExpenseLandExpense or Land improvements | |||
4. | 290,000 | Construction of the new building | No effectLandExpense or Land improvementsExpense or BuildingsBuildingLand improvementsExpenseEquipment | |||
5. | 12,000 | Paving of a parking lot beside the building | BuildingExpense or BuildingsNo effectLandLand improvementsExpense or Land improvementsEquipmentExpense | |||
6. | 6,000 | Addition of decorative landscaping around the building (such as planting flowers and ornamental shrubs) | BuildingExpense or Land improvementsExpense or BuildingsLandNo effectEquipment | |||
7. | 80,000 | Purchase of a new piece of equipment | Expense or BuildingsEquipmentExpense or Land improvementsLandLand improvementsNo effectExpenseBuilding | |||
8. | 6,000 | Sales taxes on the new equipment | ||||
If non-recoverable | Land improvementsExpense or Land improvementsNo effectEquipmentBuildingExpense or BuildingsExpenseLand | |||||
If GST or HST | Land improvementsEquipmentNo effectExpense or BuildingsExpense or Land improvementsExpenseBuildingLand | |||||
9. | 3,000 | Installation of the new equipment | Expense or Land improvementsEquipmentNo effectBuildingLandLand improvementsExpenseExpense or Buildings | |||
10. | 1,500 | Testing and adjustment of the new equipment prior to its use | Land improvementsExpense or Land improvementsExpenseLandEquipmentBuildingNo effectExpense or Buildings | |||
11. | 1,000 | Minor repairs to some old equipment | LandLand improvementsNo effectExpenseExpense or Land improvementsBuildingExpense or BuildingsEquipment | |||
12. | 7,000 | Major overhaul of an old piece of equipment, extending its useful life by three years | EquipmentBuildingExpense or Land improvementsExpense or BuildingsExpenseLandNo effectLand improvements | |||
13. | 1,200 | Routine maintenance of equipment | Expense or Land improvementsLand improvementsBuildingEquipmentNo effectExpense or BuildingsExpenseLand | |||
14. | 2,000 | Replacement of windows broken by disgruntled employees during a labour dispute | ExpenseExpense or BuildingsBuildingLandLand improvementsNo effectExpense or Land improvementsEquipment |
Amount | Description of Expenditure | ||
1 | 150000 | Acquisition of a piece of land to be used as a building site | Land |
2 | 3000 | Demolition of a small building on the land, to make way for the new building | Land |
3 | 7500 | Levelling of the land to prepare it for construction of the new building | Land |
4 | 290000 | Construction of the new building | Buildings |
5 | 12000 | Paving of a parking lot beside the building | Land improvements |
6 | 6000 | Addition of decorative landscaping around the building (such as planting flowers and ornamental shrubs) | Land |
7 | 80000 | Purchase of a new piece of equipment | Equipment |
8 | 6000 | Sales taxes on the new equipment | |
If non-recoverable | Equipment | ||
If GST or HST* | No effect | ||
9 | 3000 | Installation of the new equipment | Equipment |
10 | 1500 | Testing and adjustment of the new equipment prior to its use | Equipment |
11 | 1000 | Minor repairs to some old equipment** | Expense |
12 | 7000 | Major overhaul of an old piece of equipment, extending its useful life by three years | Equipment |
13 | 1200 | Routine maintenance of equipment** | Expense |
14 | 2000 | Replacement of windows broken by disgruntled employees during a labour dispute** | Expense |
*GST or HST will be debited to GST/HST paid or payable account and hence no effect has been mentioned since that option is not there in the options provided.
**Minor repairs to equipment, routine maintenance of equipment, and replacement of windows are expenditures incurred to maintain the assets in their current working condition and hence are charged to expense.