How are these transactions reported on the income statement of Hollerith Co. Land: On February 15,...

How are these transactions reported on the income statement of Hollerith Co. Land: On February 15, A condemnation award was received as consideeration for unimproved land held primarily as an investment, and on March 31, another parcel of unimproved land to be held as an investment was purchased at a cost of $35,000 Buildings: On april 2 land and building were purchased at a cost of $75,000, of which 20%was allocated to the building on the corporate books. The real estate was acquired with the intention of demolishing the building, and this was accomplished during the month of November. cash proceeds received in November represent the net proceeds from demolition of the building.

Expert Solution

Land: On February 15, A condemnation award was received as consideeration for unimproved land held primarily as an investment, and on March 31, another parcel of unimproved land to be held as an investment was purchased at a cost of $35,000	The $35000 land purchase has no income statement effect. The loss on the condemnation of the land of $9000 ($40000-$31000) should be reported on the income statement .
Buildings: On april 2 land and building were purchased at a cost of $75,000, of which 20%was allocated to the building on the corporate books. The real estate was acquired with the intention of demolishing the building, and this was accomplished during the month of November. cash proceeds received in November represent the net proceeds from demolition of the building.	There is no recognized gain or loss on the demolition of the building. Land = $75000 - $15000 ( Building 75000 x 20%) - $3600 demolition proceeds) = $56400

ekkarill92 answered 2 years ago

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