Madison, Inc. has the following asset account balances: Buildings and equipment $4,622,500 Accumulated depreciation 622,500 Patents 375,000 Goodwill 325,000 Accounts receivable 215,000 Land 2,507,500 What is the total amount that should reported on Madison, Inc.'s balance sheet under Property, plant, & equipment? Select one:
A. $6,507,500
B. $7,830,000
C. $7,207,500
D. $7,750,500

A. $6,507,500

Explanation:

Accumulated depreciation is the contra asset account and it needs to be adjusted in the cost of the relevant assets to represent the net book value of the assets. Building and Land are classified as the property.

Buildings and equipment                  $4,622,500

Accumulated depreciation                ($622,500)

Net Buildings and equipment            $4,000,000

Land                                                     $2,507,500

Total Property, plant, & equipment    $6,507,500

The following accounts are non Property, plant, & equipment.        

Patents    $375,000

Goodwill  $325,000

Accounts receivable 215,000