The Following Expenditures Are Related to Land, Land Improvements, and Buildings

question 81

Essay

The following expenditures are related to land, land improvements, and buildings, which were acquired on November 1, 2009.
Required:
Determine the cost of the land, the building and the improvements (Round to the nearest dollar)
Prepare journal entries on December 31, 2009 for depreciation assuming the building will have a useful life of 20 years and no residual value. Use double declining balance method and the half-year convention. Depreciate the land improvements using straight-line method, a 5 year life, to the nearest month with zero residual value (to the nearest dollar).
$$\begin{array} { | l | l | } \hline \text { Cost of real estate acquired for a new manufacturing plant } & \$ 365,000 \\\hline \text { The land is appraised for } \$ 262,800 \text { and the building for } & \\\hline \$ 102,200 . & \\\hline \text { Real estate taxes paid by the purchaser } &\$ 20,000 \\\hline \text { Cost of removing a barn } &\$ 8,500 \\ \hline \text { Architect's fees for updating building } & \$ 6,750 \\\hline \text { Attorney's fees for closing sale } & \$ 12,500 \\\hline \text { Grading land } & \$ 3,500\\\hline \text { Paving parking lot } & \$ 7,000 \\\hline \text { Planting trees and shrubs } & \$ 9,250 \\\hline \text { Cost of repairs to building due to storm during construction } &\$ 1,300\\\hline \text { Lights placed on driveway } & 4750 \\\hline \text { Fee to real estate broker } & \$ 2,500\\\hline\end{array}$$

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