Question

Acquisition Cost of Long-Lived Assets

The following items represent expenditures (or receipts) related to the construction of a new home office for Lowrey Company.

Cost of land site, which included an old apartment building appraised at $75,000	$166,000
Legal fees, including fee for title search	2,200
Payment of apartment building mortgage and related interest due at time of sale	9,400
Payment for delinquent property taxes assumed by the purchaser	4,100
Cost of razing the apartment building	18,000
Proceeds from sale of salvaged materials	(3,900)
Grading to establish proper drainage flow on land site	2,000
Architect's fees on new building	310,000
Proceeds from sales of excess dirt (from basement excavation) to owner of adjoining property (dirt was used to fill in a low area on property)	(3,000)
Payment to building contractor	6,000,000
Payment of medical bills of employee accidentally injured while inspecting building construction	2,400
Special assessment for paving city sidewalks (paid to city)	19,000
Cost of paving driveway and parking lot	26,000
Cost of installing lights in parking lot	10,200
Premium for insurance on building during construction	8,500
Cost of open house party to celebrate opening of new building	9,000

Required

From the given data, calculate the proper balances for the Land, Building, and Land Improvements accounts of Lowrey Company.

Land
Building
Land Improvements

Answer 1

SOLUTION

	Land	Building	Land Improvements
Cost of land site, which included an old apartment building appraised at $75,000	166,000
Legal fees, including fee for title search	2,200
Payment of apartment building mortgage and related interest due at time of sale	9,400
Payment for delinquent property taxes assumed by the purchaser	4,100
Cost of razing the apartment building	18,000
Proceeds from sale of salvaged materials	(3,900)
Grading to establish proper drainage flow on land site	2,000
Architect's fees on new building		310,000
Proceeds from sales of excess dirt (from basement excavation) to owner of adjoining property (dirt was used to fill in a low area on property)		(3,000)
Payment to building contractor		6,000,000
Special assessment for paving city sidewalks (paid to city)	19,000
Cost of paving driveway and parking lot			26,000
Cost of installing lights in parking lot			10.200
Premium for insurance on building during construction		8,500
Total	216,800	6,315,500	36,200