Question

Safe Parking, near an airport, incurred the following cos improvements, and construct and furnish a small building he following costs to acquire land, make land a. Purchase price of three acres of land 86,000 6,300 b. Delinquent real estate taxes uent real estate taxes on the land to be paid by Safe Parking c. Additional dirt and earthmoving 8.400 3,400 d. Title insurance on the land acquisition 9.600 e. Fence around the boundary of the property 900 f. Building permit for the building 20,100 g. Architect's fee for the design of the building 9,000 h. Signs near the front of the property 217,000 i. Materials used to construct the building 172,000 j. Labor to construct the building 9,500 k. Interest cost on construction loan for the building 29,400 1. Parking lots on the property 11,600 m. Lights for the parking lots n. Salary of construction supervisor (80% to building: 20% to parking lot and 80,000 concrete walks) 11,700 0. Furniture 1,900 p. Transportation of furniture from seller to the building 6,900 9. Additional fencing Safe Parking depreciates land improvements over 15 years, buildings over 40 years, and furniture over 10 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 September 1. Record partial-year depreciation expense for the year ended December 31. Round to the nearest dollar.

Answer 1

1	Sl no.	Land	Land improvements	Building	Furniture
	a.	86000
	b.	6300
	c.	8400
	d.	3400
	e.		9600
	f.			900
	g.			20100
	h.		9000
	i.			217000
	j.			172000
	k.			9500
	l.		29400
	m.		11600
	n.		16000	64000
			(80000*20%)	(80000*80%)
	o.				11700
	p.				1900
	q.		6900
	Total	104100	82500	483500	13600
2	Depreciation to be computed from Sep 1 to Dec 31 (For 4 months)
	Depreciation under straight-line method=Cost/Useful life
	Depreciation for 4 months=(Cost/Useful life)*(4/12)=
	Land improvements:
	Depreciation for 4 months=(82500/15)*(4/12)=$ 1833
	Building:
	Depreciation for 4 months=(483500/40)*(4/12)=$ 4029
	Furniture:
	Depreciation for 4 months=(13600/10)*(4/12)=$ 453