Question

There are two parts to this problem a) & b)
A company made the following expenditures in connection with the construction of a new building:
Architect’s fees	$12,000
Cash paid for land and unusable building on the land	300,000
Removal of old building	18,000
Salvage from sale of old building materials	-4,000
Construction survey	1,500
Legal fees for title search	3,000
Excavation for basement construction	25,000
Machinery purchased for operations	100,000
Freight on machinery purchased	1,600
Construction costs of new building	1,000,000
Construction of parking lot and driveway	33,000
Install perimeter fencing	7,500
Installation of machinery	2,500
a) Required: Prepare a schedule showing the amounts to be recorded as Land, Land Improvements, Buildings, and Machinery.
(See pages 355 &356 Cost Determination for how to determine)
	Land	Land Improv	Buildings	Machinery
Architect’s fees
Cash paid for land and unusable building on the land
Removal of old building
Salvage from sale of old building materials
Construction survey
Legal fees for title search
Excavation for basement construction
Machinery purchased for operations
Freight on machinery purchased
Construction costs of new building
Construction of parking lot and driveway
Install perimeter fencing
Installation of machinery
Useful life	Indefinate	15 years	40 years	10 years
Salvage		$5,000	$250,000	$25,000
Depreciation method		DDB	SL	DDB
(DDB - double declining balance, SL - straight line)
Assume that all assets are put in service on 7-1-16
b) Required: Calculate straight line for the Building in 2016 & 2017
Prepare depreciation schedules for the life of Land Improvements & Machinery     (Round everything to a dollar)
(Straight-line is on pages 358 & 359) (Double Declining Balance is on pages 360 & 361) (Partial year depreciation - page 362)
Building
2016
2017
Land Improvements
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Machinery
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026 PLEASE show how you calculated the answer so it is easier to understand, thank you!

Answer 1

Depreciation Schedule of Land Improvement:

Depreciation Schedule of Machinery:

Depreciation Schedule of Building:

Here in SLM, Depreciation is calculated as = (1026500-250000)/40 = 19412.5 per year. In first year it is for 6 months so half ie. 9706.25

In DDB method Depreciation is calculated as
Example Machinery : SLM rate = (104100-25000)/10 = 7910/79100 = 10%
In DDB method rate is double so 20%, but in first year for 6 months it is 10%. Same method for Land Improvement.