Expert Answers

E7-3

Fastball Delivery Company acquired an adjacent lot to construct a new warehouse, paying $30,000 and giving a short-term note for $270,000. Legal fees paid were $1,425, delinquent taxes assumed were $12,000, and fees paid
to remove an old building from the land were $18,500. Materials salvaged from the demolition of the building were sold for $4,500. A contractor was paid $910,000 to construct a new warehouse. Determine the cost of the land
to be reported on the balance sheet.

E7-4

Connect Lines Co. incurred the following costs related to trucks and vans used in
operating its delivery service:
1. Replaced a truck’s suspension system with a new suspension system that allows
for the delivery of heavier loads.
2. Installed a hydraulic lift to a van.
3. Repaired a flat tire on one of the vans.
4. Overhauled the engine on one of the trucks purchased three years ago.
5. Removed a two-way radio from one of the trucks and installed a new radio
with a greater range of communication.
6. Rebuilt the transmission on one of the vans that had been driven 40,000
miles. The van was no longer under warranty.
7. Changed the radiator fluid on a truck that had been in service for the past four years.
8. Tinted the back and side windows of one of the vans to discourage theft of contents.
9. Changed the oil and greased the joints of all the trucks and vans.
10. Installed security systems on four of the newer trucks.
Classify each of the costs as a capital expenditure or a revenue expenditure.

E7-8

A refrigerator used by a meat processor has a cost of $93,750, an estimated residual
value of $10,000, and an estimated useful life of 25 years. What is the
amount of the annual depreciation computed by the straight-line method?

Please use attached excel doc for the answers.