A. A company purchased land for $90,000 cash. Real estate brokers' commission was $5,000 and...

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A. A company purchased land for $90,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at:

a. $107,000.

b. $90,000.

c. $70,000.

d. $102,000.

B. Wesley Hospital installs a new parking lot. The paving cost $40,000 and the lights to illuminate the new parking area cost $25,000. Which of the following statements is true with respect to these additions?

a. $40,000 should be debited to the Land account.

b. $25,000 should be debited to Land Improvements.

c. $65,000 should be debited to the Land account.

d. $65,000 should be debited to Land Improvements.

Property, Plant and Equipment

Property, Plant and Equipment or simply called are those non-current assets that comprises the largest portion of the total assets in the balance sheet. These are physical asset uses for production of goods and services like factory building, land and equipment, to be used as an office building of employees and management. All PPE except land are all depreciated, or a systematic decrease in value over its useful life.

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A. A company purchased land for $90,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the...

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Acquisition of Property, Plant & Equipment

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Chapter 9 / Lesson 4
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One of the main categories of long-term assets is known as property, plant, and equipment, encompassing the location, buildings, and equipment needed in production. Learn how the acquisition of property, plant, and equipment is recorded and documented through an example of journaling.


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