Reference no: EM133145088

Question - Bellow Company purchased land for use as its corporate headquarters. A small factory that was on the land when it was purchased was torn down before construction of the office building began. Furthermore, a substantial amount of rock blasting and removal had to be done to the site before construction of the building foundation began. Because the office building was set back on the land, far from the public road, Bellow had the contractor construct a paved road that led from the public road to the parking lot of the office building.

Three years after it occupied the office building, Bellow added four stories to the office building. The four stories had an estimated useful life of 5 years more than the remaining estimated useful life of the original office building.

Required - Which of the preceding expenditures does the company capitalize? How does it depreciate or amortize each? Explain the rationale for your answers.