Question

At December 31, 2019, certain accounts included in the property, plant, and equipment section of Whispering Winds Corporation's statement of financial position had the following balances: Land $309,670 Buildings-Structure 882,700 Leasehold Improvements 704,910 Equipment 844,960 During 2020, the following transactions occurred: 1. Land site No. 621 was acquired for $799,660 plus a fee of $6,670 to the real estate agent for finding the property. Costs of $33,210 were incurred to clear the land. In clearing the land, topsoil and gravel were recovered and sold for $10,850 2. Land site No. 622, which had a building on it, was acquired for $559,860. The closing statement indicated that the land's assessed tax value was $308,580 and the building's value was $101,800. Shortly after acquisition, the building was demolished at a cost of $27,600. A new building was constructed for $339,540 plus the following costs: Excavation fees $37,650 Architectural design fees 14,930 Building permit fee 2,420 "Green roof" design and construction (to be retrofitted every seven years) 35,500 Imputed interest on funds used during construction (share financing) 8,440 The building, completed and occupied on September 30, 2020, is expected to have a 30-year useful life A third tract of land (No. 623) was acquired for $264,750 and was put on the market for resale 4. During December 2020, costs of $88,940 were incurred to improve leased office space. The related lease will terminate on December 31, 2022, and is not expected to be renewed 3. 5. Equipment was purchased under a royalty agreement. The terms of the agreement require Whispering Winds Corporation to pay royalties based on the units of production for the equipment. The equipment's invoice price was $110,620, freight costs were $2,910, installation costs were $3,310, and royalty payments for 2020 were $14,960

Answer 1

Opening balance of land. $309670

Land site number 621.

Acquisition cost. $799660

Commission to real estate agent. $6670

Clearing cost. $33210

Amount recovered to be deducted. $10850

Total land site number 621. $1138360

Land site number 622

Land value $308580

Building value $101800

Demolition cost $27600

Total land site number 622. $437980

Closing balance of December 31 20 $1576340

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