Allocating payments and receipts to fixed asset accounts The following payments and receipts are related to land, land i

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Allocating payments and receipts to fixed asset accounts
The following payments and receipts are related to land, land
improvements, and buildings acquired for use in a wholesale ceramic
business. The receipts are identified by an asterisk.
Required:
1. Assign each payment and receipt to
Land (unlimited life), Land Improvements (limited life), Building,
or Other Accounts. Choose the correct account from the dropdown
list for each letter and enter the appropriate amount. Enter
receipts as negative amounts using the minus sign.
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
LandLand ImprovementsBuildingOther Accounts
2. Determine the amount debited to Land,
Land Improvements, and Building.
3. Land used as a plant site
doesdoes not
lose its ability to provide services; thus, it
isis not
depreciated. However, land improvements
dodo not
lose their ability to provide services as time passes and
are, therefore,
not depreciateddepreciated
.
4. What would be the effect on the income
statement and balance sheet if the cost of filling and grading land
of $12,000 [payment (i)] was incorrectly classified as Land
Improvements rather than Land? Assume Land Improvements are
depreciated over a 20-year life using the double-declining-balance
method.
Depreciation expense would be overstated, land would be
understated, and net income would be understated.Depreciation
expense would be overstated, land improvements would be overstated
and net income would be overstated.