CHAPTER 10

Plant Assets
SOLUTIONS TO EXERCISES

EXERCISE 10-1
(a) Under the historical cost principle, the acquisition cost for a plant asset includes all
expenditures necessary to acquire the asset and make it ready for its intended use. For example,
the cost of factory machinery includes the purchase price, freight costs paid by the purchaser,
insurance costs during transit, and installation costs.

(b) 1. Land
2. Equipment
3. Equipment
4. Land Improvements
5. Equipment
6. Equipment
7. Prepaid Insurance
8. License Expense

EXERCISE 10-2
1. Equipment
2. Equipment
3. Equipment
4. Land
5. Prepaid Insurance
6. Land Improvements
7. Land Improvements
8. Land
9. Buildings

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 10-1
EXERCISE 10-3

(a) Cost of land

Cash paid $86,000
Net cost of removing warehouse
($9,400 – $1,700) = 7,700
Attorney’s fee 1,100
The real estate broker’s fee 5,100
Total $99,900

(b) The architect’s fee ($7,800) should be debited to the Buildings account. The cost of the
driveways and parking lot ($14,000) should be debited to Land Improvements.

SOLUTIONS TO PROBLEMS

PROBLEM 10-1A

Item Land Buildings Other Accounts

1 ($ 6,600)
2 $780,000
3 $ 5,000 Property Tax Expense
4 ( 145,000)
5 35,000
6 10,500
7 ( 2,800)
8 14,000 Land Improvements
9 ( 15,000)
10 (3,600)
($165,800 $825,500

10-2 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)