A Company Needed a New Building

question 48

Essay

A company needed a new building.It found a suitable location with an existing old building on the land.The company reached an agreement to buy the land and the building for $960,000 cash.The old building was demolished to make way for the needed new building.Following is information regarding the demolition of the old building and construction of the new one:
Construction cost of new building $8,900,000
Cost for parking lot……………………………………….$260,000
Demolition of old building…………………………… 200,000
Proceeds from sale of salvaged materials from old building 70,000
Prepare a single journal entry to record the above costs assuming all transactions are paid in cash.

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Definitions:

Labor Union

A labor union is an organized association of workers formed to protect and further their rights and interests.

Economic Theory

A set of principles and frameworks used to analyze, describe, and predict how an economy functions.

Cause-and-Effect Relationships

Connections between variables where a change in one variable (the cause) directly brings about a change in another variable (the effect).

Guidebook

A book with information or instructions to help users understand or accomplish something, often related to travel or specific subjects.