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Belvidere Furniture purchasedâ land, paying $ 60,000 cash and signing a $ 280,000 note payable. Inâ addition, Belvidere paid delinquent property tax of $ 3,500â, title insurance costing $ 3,000â, and $ 7,000 to level the land and remove an unwanted building. The company then constructed an office building at a cost of $450,000. It also paid $ 53,000 for a fence around theâ property, $ 19,000 for a sign near theâ entrance, and $ 9,000 for special lighting of the grounds.

Requirements
1. Determine the cost of the land, land improvements, and building.
2. Which of these assets will Lawson depreciate?

Respuesta :

Answer:

1. $353,500, $81,000 and $450,000

Explanation:

The computation is shown below:

1. For land = Cash paid + note payable + delinquent property tax +  title insurance + removing cost

= $60,000 + $280,000 + $3,500 + $3,000 + $7,000

= $353,500

For land improvements = Fencing cost + signing cost + special lighting cost

                                       = $53,000 + $19,000 + $9,000

                                       = $81,000

And the cost of the building is $450,000

2. The building and land improvement is depreciation if land improvement have a useful life

The land should not be depreciated because of unlimited life.  

                                 

                                 

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