Capitalizing acquisition costs.
Gibbs Manufacturing Co. was incorporated on 1/2/14 but was unable to begin manufacturing activities until 8/1/14 because new factory facilities were not completed until that date. The Land and Buildings account at 12/31/14 per the books was as follows: Additional information:1. To acquire the land and building on 1/31/14, the company paid $100,000 cash and 1,000 shares of its common stock (par value = $100/share) which is very actively traded and had a fair value per share of $160.2. When the old building was removed, Gibbs paid Kwik Demolition Co. $4,000, but also received $1,500 from the sale of salvaged material.3. Legal fees covered the following: 4. The fire insurance premium covered premiums for a three-year term beginning May 1, 2014.5. General expenses covered the following for the period 1/2/14 to 8/1/14. "6. Because of the rising land costs, the president was sure that the land was worth at least $75,000 more than what it cost the company.
InstructionsDetermine the proper balances as of 12/31/14 for a separate land account and a separate buildings account. Use separate T-accounts (one for land and one for buildings) labeling all the relevant amounts and disclosing all computations."

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Capitalizing acquisition costs.
Gibbs Manufacturing Co. was incorporated on 1/2/14 but was unable to begin manufacturing activities until 8/1/14 because new factory facilities were not completed until that date. The Land and Buildings account at 12/31/14 per the books was as follows:  Additional information:1. To acquire the land and building on 1/31/14, the company paid $100,000 cash and 1,000 shares of its common stock (par value = $100/share) which is very actively traded and had a fair value per share of $160.2. When the old building was removed, Gibbs paid Kwik Demolition Co. $4,000, but also received $1,500 from the sale of salvaged material.3. Legal fees covered the following:  4. The fire insurance premium covered premiums for a three-year term beginning May 1, 2014.5. General expenses covered the following for the period 1/2/14 to 8/1/14.  "6. Because of the rising land costs, the president was sure that the land was worth at least $75,000 more than what it cost the company.
InstructionsDetermine the proper balances as of 12/31/14 for a separate land account and a separate buildings account. Use separate T-accounts (one for land and one for buildings) labeling all the relevant amounts and disclosing all computations."

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The Answer of Capitalizing acquisition costs.
Gibbs Manufacturing Co. was incorporated on 1/2/14 but was unable to begin manufacturing activities until 8/1/14 because new factory facilities were not completed until that date. The Land and Buildings account at 12/31/14 per the books was as follows:  Additional information:1. To acquire the land and building on 1/31/14, the company paid $100,000 cash and 1,000 shares of its common stock (par value = $100/share) which is very actively traded and had a fair value per share of $160.2. When the old building was removed, Gibbs paid Kwik Demolition Co. $4,000, but also received $1,500 from the sale of salvaged material.3. Legal fees covered the following:  4. The fire insurance premium covered premiums for a three-year term beginning May 1, 2014.5. General expenses covered the following for the period 1/2/14 to 8/1/14.  "6. Because of the rising land costs, the president was sure that the land was worth at least $75,000 more than what it cost the company.
InstructionsDetermine the proper balances as of 12/31/14 for a separate land account and a separate buildings account. Use separate T-accounts (one for land and one for buildings) labeling all the relevant amounts and disclosing all computations."

Capitalizing Acquisition Costs. Gibbs Manufacturing Co. Was Incorporated on 1/2/14 but Was Unable