Joined: 09 Feb 2010
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Posted: 12 Apr 2010 at 16:38 | IP Logged
I have a question that I am confused on and maybe someone can help. I am given four accounts that are used. Land, Building, Land Improvements, and Cash. Basically a company purchased land with an old building. They paid $70,000 to graze old building. They received proceeds of $6,000 from salvaged windows and doors from the old building.
I know the cost of grazing is capitalized, debiting land for $70,000 and crediting cash for $70,000 but I am not sure about the proceeds from the salvaged windows/doors? Now obviously we would debit cash of $6,000, but what would I credit? I was thinking Land since we capitalize the cost of grazing the old building and the proceeds of $6,000 would decrease the cost of grazing the old building?
Joined: 09 Feb 2010
Online Status: Offline Posts: 19
Posted: 12 Apr 2010 at 18:13 | IP Logged
So what would we book it too?
Cash 6,000 Land &n bsp; 6,000 (proceeds from salvage windows/doors on building being grazed from land)
The question just gives those four accounts to book to. It's not building since it's an old building being removed and not land improvement. So I'm thinking it would decrease the capitalization of the grazing of the old building form land.
Joined: 02 Jan 2010 Location: United States
Online Status: Offline Posts: 118
Posted: 12 Apr 2010 at 20:48 | IP Logged
lukez wrote:
So what would we book it too?
Cash 6,000 Land &a mp;n bsp; 6,000 (proceeds from salvage windows/doors on building being grazed from land)
The question just gives those four accounts to book to. It's not building since it's an old building being removed and not land improvement. So I'm thinking it would decrease the capitalization of the grazing of the old building form land.
That's correct. You would deduct the scrap from the cost of the Land.
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Topic: Capitalization Question
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