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Presented below is a schedule of property dispositions for Frank Thomas Co.

Presented below is a schedule of property dispositions for Frank Thomas Co.


Schedule of Property Dispositions


Accumulated
Cash
Fair Market
Nature of

Cost
Depreciation
Proceeds
Value
Disposition
Land
$40,000
           
$31,000
$31 ,000
Condemnation
Building
15,000
__
3,600
_
Demolition
Warehouse
70,000
$11,000
74,000
74,000
Destruction by fire
Machine
8,000
3,200
900
7,200
Trade-in
Furniture
10,000
7,850
—
3,100
Contribution
Automobile
8,000
3,460
2,960
2,960
Sale



February 15, a condemnation award was received as consideration for unimproved land held prima-as an investment, and on March 31, another parcel of unimproved land to be held as an investment is purchased at a cost of $35,000.

Building
- April 2, land and building were purchased at a total cost of $75,000, of which 20% was allocated to "--• building on the corporate books. The real estate was acquired with the intention of demolishing the . ;lding, and this was accomplished during the month of November. Cash proceeds received in November resent the net proceeds from demolition of the building.

Warehouse
3n June 30, the warehouse was destroyed by fire. The warehouse was purchased January 2, 2004, and :-.j depreciated $11,000. On December 27, the insurance proceeds and other funds were used to purchase placement warehouse at a cost of $90,000.

Machine
December 26, the machine was exchanged for another machine having a fair market value of $6,300 :-nd cash of $900 was received. (The exchange lacks commercial substance.)

Furniture
August 15, furniture was contributed to a qualified charitable organization. No other contributions - ere made or pledged during the year.

Automobile
November 3, the automobile was sold to Ozzie Guillen, a stockholder.

Instructions
Indicate how these items would be reported on the income statement of Frank Thomas Co. (AICPA adapted)
TUTORIAL PREVIEW
The following accounting treatment appears appropriate for these items:

Land— the loss on the condemnation of the land of $9,000 ($40,000 – $31,000) should be reported as an extraordinary item on the income statement.
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