A Company Purchases Property That Includes Land,buildings,and Equipment for $5

question 47

Essay

A company purchases property that includes land,buildings,and equipment for $5.5 million.The company pays $180,000 in legal fees,$220,000 in commissions,and $100,000 in appraisal fees.The land is estimated at 25%,the buildings are at 40%,and the equipment at 35% of the property value.Prepare the journal entry that is required to record the purchase assuming that the company paid 50% of the amounts using cash and signed a note for the remainder.Explain how you derived your answer.

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Definitions:

Material A

Material A most likely refers to a specific type of raw material used in production processes, identifiable by a unique characteristic or designation.

Materials Price Variance

The variance between the standard cost and the actual expense of materials, calculated by multiplying the actual volume of materials utilized.

Total Labor Variance

A metric that measures the difference between the actual cost of labor and the standard or budgeted cost.

Materials Quantity Variance

This refers to the difference between the expected amount of materials needed for production and the actual amount used, which can impact manufacturing costs.