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Firton Brothers purchased for $90,000 a tract of land that included an abandoned warehouse. The warehouse was razed, and the site was prepared for a new building at a cost of $10,000. Scrap materials from the warehouse were sold for $7,000. A building was then constructed for $140,000, a driveway and parking lot were laid for $32,000, and permanent landscaping was completed for $4,000. Firton Brothers depreciates fixed assets over a twenty-year period using the straight-line method.
a. Compute the amount of cost to be placed in the land, land improvements, and building accounts.
b. Assuming a salvage value of zero, compute the depreciation expense associated with the items above for the first year.
consider the following information on three
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