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?

Question

Business

Murphy

13 April, 06:23

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?

+2

Answers (1)

Know the Answer?

Roland Fuentes · Answer 1

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.