In: Accounting
In 2017, Nobles Company paid $975,000 for real estate that
included a tract of
land on which two buildings were located. The plan was to demolish
Building A,
and build a new store in its place. Building B was to be used as a
company
office, and was appraised to have a value of $315,000, with a
useful life of 20
years, and a $45,000 scrap value. A lighted parking lot near
Building B had
improvements valued at $105,000 that were expected to last another
five years,
and have no salvage value. In its existing condition, the tract of
land was
estimated to have a value of $630,000.
Nobles company incurred the following additional costs:
(a) Cost to demolish Building A, to make the Land
useable............. $71,250
(b) Cost to landscape new building
site............................................ $81,000
(landscaping was predicted to last 20 years, no scrap value)
(c) Cost to build new building (Building C) on former site of
Building A, having a useful life of 25 years, and a $75,000
scrap
value..................................................................................
$1,125,000
(d) Cost of new land improvements for Building C, which have
an
8-year useful life, and no scrap
value.......................................... $187,500
i) Prepare a form having the following headings: Land, Building
B, Building C,
Land Improvements B, and Land Improvements C. Allocate the
costs
incurred by Noble Company to the appropriate columns and total
each
column.
ii) Prepare a single journal entry dated July 1, 2017, to record
all of the costs
incurred, assuming they were all paid in Cash.
iii) Prepare December 31, 2017, adjusting entries to record
depreciation for the
months during 2017 that the assets were in use. Use
straight-line
depreciation for your calculations.