Previn Brothers Inc. purchased land at a price of $27,000. Closing costs were $1,400.

BE10.1 (LO 1) Previn Brothers Inc. purchased land at a price of $27,000. Closing costs were $1,400. An old building was removed at a cost of $10,200. What amount should be recorded as the cost of the land?

BE10.2 (LO 2) Hanson Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,800,000 on March 1, $1,200,000 on June 1, and $3,000,000 on December 31. Compute Hanson’s weighted-average accumulated expenditures for interest capitalization purposes.

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Expert Solution

BRIEF EXERCISE 10-1

$27,000 + $1,400 + $10,200 = $38,600

BRIEF EXERCISE 10-2

Expenditures
Date	Amount	Capitalization Period	Weighted-Average Accumulated Expenditures
3/1	$1,800,000	10/12	$1,500,000
6/1	1,200,000	7/12	700,000
12/31	3,000,000	0	0
	$6,000,000		$2,200,000

devender singh answered 2 years ago

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