Question

> Problems Group A bjectives 1, 2 P9-30A Determining asset cost and recording partial-year depreciation Park and Fly, near an airport, incurred the following costs to acquire land, make land improvements, and construct and furnish a small building: Bldg. 5446,100 a. Purchase price of three acres of land b. Delinquent real estate taxes on the land to be paid by Park and Fly C. Additional dirt and earthmoving d. Title insurance on the land acquisition e. Fence around the boundary of the property f. Building permit for the building 9. Architect's fee for the design of the building h. Signs near the front of the property i Materials used to construct the building j. Labor to construct the building k. Interest cost on construction loan for the building Parking lots on the property m. Lights for the parking lots n. Salary of construction supervisor (80% to building: 20% to parking lot and concrete walks) 0. Furniture p. Transportation of furniture from seller to the building q. Additional fencing $ 85,000 5,500 8,300 3,400 9,400 1,200 20,600 9,700 211,000 172,000 9,300 28,800 10,600 40,000 11,600 2,000 6,000 Park and Fly depreciates land improvements over 20 years, buildings over 40 years, and furniture over eight 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 the assets were placed in service on Octo ! Record partial-year depreciation expense for the year ended December 31. P9-31A Determining asset sostomrenndinn fimt ves 1.2

Answer 1

Answer- The total cost of each asset:-

Particulars	Land	Land Improvements	Building	Furniture
Purchase price of three acres of land	85,000
Delinquent Real estate taxes on the land to be paid by Park and Fly	5,500
Additional Dirt and earthmoving	8,300
Title Insurance on the land acquisition	3,400
Fence around the boundary of the property		9,400
Building permit for the building			1,200
Architect's Fees for the design of building			20,600
Signs near the front of property		9,700
Building materials used to construct the building			211,000
Building labor to construct the building			172,000
Interest cost on construction loan for the building			9,300
Parking lots to the property		28,800
Lights for parking lots		10,600
Salary of construction supervisor (20%:80%)		8,000	32,000
Furniture				11,600
Transportation of furniture from seller to building				2,000
Additional fencing		6,000
Total	102,200	72,500	446,100	13,600

2) Calculation of partial year depreciation expense for year ended Dec 31

Depreciation on Land improvements = (Total cost/20 years)*3 months/12 months

= ($72,500/20 yrs)*3/12 = $906

Depreciation on Building = (Total cost/40 yrs)*3 months/12 months

= ($446,100/40 yrs)*3/12 = $2,788

Depreciation on Furniture = (Total cost/8 yrs)*3 months/12 months

= ($13,600/8 yrs)*3/12 = $425

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