Question

At December 31, 2015, certain accounts included in the property, plant, and equipment section of Kevin Company’s balance sheet had the following balances:

Land          ........................................................................... $200,000

Buildings    ........................................................................... $900,000

Leasehold improvements..................................................... $600,000

Machinery and equipment.................................................. $700,000

During 2016, the following transactions occurred:

Land site number 621 was acquired for $1,000,000. Additionally, to acquire the land, Kevin paid a $60,000 commission to a real estate agent. Costs of $15,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $5,000.

A second tract of land (site number 622) with a building was acquired for $300,000. The closing statement indicated that the land value was $200,000 and the building value was $100,000. Shortly after acquisition, the building was demolished at a cost of $30,000. A new building was constructed for $150,000 plus the following costs:

Excavation fees...................................................................... $11,000

Architectural design fees......................................................... $8,000

Building permit fee................................................................... $1,000

The building was completed and occupied on September 29, 2016.

A third tract of land (site number 623) was acquired for $600,000 and was put on the market for resale.

Extensive work was done to a building occupied by Kevin under a lease agreement that expires on December 31, 2025. The total cost of the work was $125,000, which consisted of the following:

Painting of ceilings............................................................................. $10,000 (estimated useful life is 1 year)

Electrical work.................................................................................... $35,000 (estimated useful life is 10 years)

Construction of extension to current working area       ..................... $80,000 (estimated useful life is 30 years)                                                                                     $125,000

The lessor, Steinbeck Company, paid one-half of the costs incurred in connection with the extension to the current working area.

During December 2016, costs of $65,000 were incurred to improve leased office space. The related lease will terminate on December 31, 2018, and is not expected to be renewed.

A group of new machines was purchased under a royalty agreement that provides for payment of royalties based on units of production for the machines. The invoice price of the machines was $75,000, freight costs were $2,000, unloading charges were $1,500, and royalty payments for 2016 were $13,000.

Required:

Prepare a detailed analysis of the changes in the balance sheet accounts – Land, Buildings, Leasehold Improvements, and Machinery and Equipment – for 2016. Disregard the related accumulated depreciation accounts.

KEVIN COMPANY
Analysis of Land Account
For 2016
Balance at January 1, 2016
Land site number 621:
Total land site number 621
Land site number 622:
Total land site number 622
Balance at December 31, 2016
KEVIN COMPANY Analysis of Buildings Account For 2016 Balance at January 1, 2016 Cost of new building constructed on land site number 622: Balance at December 31, 2016 $1,070,000

KEVIN COMPANY
Analysis of Leasehold Improvements Account
For 2016
	Balance at January 1, 2016
	Balance at December 31, 2016				$740,000
KEVIN COMPANY Analysis of Machinery and Equipment Account For 2016 Balance at January 1, 2016 Cost of new machines acquired: Balance at December 31, 2016

Please help. Thank you. I included the templates.

Answer 1

KEVIN COMPANY
Analysis of Land Account
For 2016
Balance at January 1, 2016		200,000
Land site 621
Acquisition Cost:	1,000,000
Commission:	60,000
Claring Cost:	15,000
Timber & Gravel recovered	(5,000)
Total land site number 621		1,070,000
Land site 622		300,000
Land Site 623		600,000
Balance at Dec 31, 2016		1,100,000
KEVIN COMPANY
Analysis of Building Account
For 2016
Balance at January 1, 2016		900,000
Cost of new building constructed on land site number 622		170,000
Construction Cost	150,000
Excavation Fee	11,000
Architectural Fee	8,000
Permit Fee	1,000
Net Cost	170,000
Balance at Dec 31, 2016		1,070,000
Kevin Company
Analysis of Leasehold improvement Account
for 2016
Balance at 1st Jan 2016		600,000
Improvement in leased building
Electrical Work	35,000
Extention to current area	40,000
		75,000
Imrovement in Office space		65,000
Balance at Dec 31, 2016		740,000
Kevin Company
Analysis of Machinery and Equipment Account
For 2016
Balance at January 1, 2016		700,000
Cost of new machines acquired:		78,500
Cost	75,000
Freight	2,000
Unlaoding Charges	1,500
	78,500
Balance at Dec 31, 2016		778,500