AC321 F17 Ex #4 Ch 10-12  … Name(s)

Instructions: Place your responses in the blank space below the question. Show all of your work and label (name) your numbers.

Points are allocated to the work/labels you show, as well as the final answer. Show work and label your numbers for all numbers that do not appear in the

problem.

Place your final response on the line provided, where appropriate.

1. Marshall Corporation bought land and a building for $1,012,500. They made the purchase with the intent of using the site for a factory. Marshall tore down the building at a cost of $90,000 and sold scrap from the tear-down for $6,075. Additional costs related to this property include:

What is the cost of the land?

$ ____________________ (6 pts)

2. McClain, Inc. purchased a group of assets for $2,800. The assets purchased (and their market values) were land ($950), building ($1,400), equipment ($1,050), and a truck ($1,700). McClain allocates the cost of these assets based on the relative fair market values. How much of the cost is allocated to the building? (Do not round until your final answer. Your final answer should be in whole dollars (no decimals)).

$ _______________ (6)

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AC321 F17 Ex #4 Ch 10-12  … Name(s)

3. Turkey Incorporated began constructing a building on the 1st of January and completed construction on the 31st of December, of the same year. Cost on the construction during this one-year period were as follows:

On January 1,Turkey borrowed $1,600 to finance the construction. They signed a 5-year, 12% note when they borrowed the money. Additional debt Turkey owed during the entire year included a 10%, 3-year, $2,400 note and an 11%, 4-year, $6,000 note. (Round intermediate calculations to four decimals and final answers to whole dollars).

(a) What are the weighted average accumulated expenditures?

$ ____________________ (a) (5)

(b) What is the amount of avoidable interest?