Chapter 10, Problem P10.30APGA

Determining asset cost and recoding partial-year depreciation, straight-line

Learning Objectives 1, 2

1. Bldg. $$461,100

Discount Parking, near an airport, incurred the following costs to acquire land, make land improvements, and construct and furnish a small building:

Purchase price of three acres of land	$ 80,000
Delinquent real estate taxes on the land to be paid by Discount Parking	6,300
Additional dirt and earthmoving	9,000
Title insurance of the land acquisition	3,200
Fence around the boundary of the property	9,600
Building permit for the building	1,000
Architect’s fee for the design of the building	20,700
Signs near the front of the property	9,300
Materials used to construct the property	215,000
Labor to construct the property	175,000
Interest cost on construction loan for the building	9,400
Parking lots on the property	28,500
Lights for the parking lots	11,200
Salary of construction supervisor (80% to building; 20% to parking lot and concrete walls)	50,000
Furniture	11,200
Transportation of furniture from seller to the building	2,200
Additional fencing	6,600

Discount Parking depreciates land improvements over 15 years, buildings over 40 years, all on a straight-line basis with zero residual value.

Requirements

1. Set up columns for Land, Land Improvements, Building, and Furniture. Show how to account for each cost by listing the cost under the correct account. Determine the total cost of each asset.
2. All construction was complete and assets were placed on October 1. Record partial-year depreciation expense for the year ended December 31.Round to the nearest dollar.