Reference no: EM133002308

Questions -

Q1: Cheyenne Company purchased land for $115400 with the intentions of constructing a new operating facility. The land purchase included a dilapidated building that was removed at a cost of $15000. The only salvage value from this old building was some materials which were sold for proceeds of $3500. Cheyenne had paid surveying costs of $1500 and legal fees related to land transfer of $6400. The new building was quickly constructed at a total cost of $422700. Permits on the construction of this new facility totalled $17800. Insurance premiums of $8700 are paid annually. The production manager is currently on-site facilitating the production startup. This manager is an annual salary of $85100. What capital cost is assigned to the new building?

Q2: On January 1, 2021, $900000, 5-year, 5% bonds, were issued for $861611. The interest rate in effect when the bonds were issued was 6%. Interest is paid semi-annually on January 1 and July 1. What would be the amortized cost of the bonds on January 1, 2022?