Reference no: EM132739600
Gravel Company (GC) had been renting its office building for several years. On January 1, 2020, GC decided to have a new office building constructed. On that date, it acquired land with an abandoned warehouse on it for $350,000. Other costs included the following:
Demolition of warehouse - $18,000
Legal fees for purchase of land- 3,300
Construction costs of new building - 686,000
Proceeds from salvage of warehouse materials- 6,000
Installation of wiring and plumbing fixtures- 13,000
Architectural fees- 21,000
Required:
Problem A- Calculate at what amount GC should record the (i) land and (ii) building. Show your calculations
Problem B- Assume that the building was completed and occupied on December 31, 2020. It has an estimated useful life of 40 years, with residual value of $140,000. Calculate depreciation for 2021 using the straight line method.