Cala Manufacturing purchases land for $477,000 as part of its plans to build a new plant. The company pays $40,700 to tear down an old building on the lot and $60,165 to fill and level the lot. It also pays construction costs $1,535,600 for the new building and $96,932 for lighting and paving a parking area. Prepare a single journal entry to record these costs incurred by Cala, all of which are paid in cash.

(A) Record the Total Costs of the plant assets.

Transaction           General Journal           Debit        Credit      

1                                    Land                  477000                          

                              Dismantling cost           40700      

                                   Leveling cost           60165      

                              Construction cost           1535600      

                             Lighting & Paving Area   96932      

                                    Cash                                         2210397

Note:        

1. According to IAS 16 Cost of asset consists of expense which has endurs future economic benefit.  

2. Cost of Asset includes construction cost ,development cost , Dismantling cost and lighting & paving area etc.

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