Question

1. The following expenditures were incurred by

Krunk Company in purchasing land:
cash price $70,000, accrued taxes $3,000,
attorneys’ fees $2,500, real estate broker’s
commission $2,000, and clearing and grading
$3,500. What is the cost of the land?
 Answer
• Cash price : $70.000
• Accrued Taxes : $3.000
• Attorneys fees : $2.500
• Broker commision :$2.000
• Clearing and Garding:$3.500
• Cost of the land :$ 81.000
• 3. Tomorry Company acquires a delivery truck
at a cost of $42,000. The truck is expected to
have a salvage value of $6,000 at the end of its
4-year useful life. Compute annual
depreciation for the first and second years
using the straight-line method.
 Answer
• Delivery truck at cost – salvage value= accumulated cost.
• $42.000 - $6.000 = $36.000
• Annual depreciation with straight line method =
accumulated cost/useful life
• $36.000/4
• = $9.000
• Because this accumulated use straight line method, so
that depreciation value for first and second years is
same.