Chapter 9 PPE Costs Classification Example

Money borrowed to pay building contractor (signed a note)

Other Accounts → Notes Payable

Payment for construction from note proceeds

Building

Cost of land fill and clearing

Land

Delinquent real estate taxes on property assumed by purchaser

Land

Premium on 6-month insurance policy during construction

Building

Refund of 1-month insurance premium (construction completed early)

Building

Architect’s fee on building

Building

Cost of real estate purchased as a plant site

Land

Commission fee paid to real estate agency

Land

Installation of fences around property

Land Improvements

Cost of razing and removing building

Land

Proceeds from salvage of demolished building

Land (deduction)

Interest paid during construction on borrowed money

Building

Cost of parking lots and driveways

Land Improvements

Cost of trees and shrubbery (permanent)

Land Improvements

Excavation costs for new building

Building