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Determining the Costs of Assets

Gegax Manufacturing incurred the following costs in acquiring land, making land improvements, and constructing and furnishing a new building.

a. Purchase price of four acres of land.................................$200,000
b. Additional dirt and earthmoving...........................................$8,100
c. Fence around the boundary of the property..........................$17,600
d. Attorney fee for title search on the land...............................$1,000
e. Unpaid property taxes on the land to be paid by Gegax.......$5,900
f. Company signs at the front of the property..........................$4,400
g. Building permit for the building...............................................$500
h. Architect's fee for the design of the building......................$22,500
i. Labor to construct the building.........................................$709,000
j. Materials used to construct the building..........................$224,000
k. Landscaping.............................................................................$6,400
l. Parking lot and concrete walks............................................$29,700
m. Lights for the parking lot and walkways..............................$10,300
n. Salary of construction supervisor (85% to building; 15% to parking lot and concrete walks).....................................................................$40,000
o. Furniture for the building..................................................$107,100
p. Transportation and installation of furniture........................$2,100

Gagax depreciates buildings over 40 years, land improvements over 20 years, and furniture over 8 years, all on a straight-line basis with zero residual value.

Requirements

*Please see the attachment.
1. Set up columns for Land, Land Improvements, Building, and Furniture. Show how to account for each cost by listing the cost under the correct account. Determine the total cost of each asset.
2. All construction was complete and assets were placed in service on May 1. Record partial-year depreciation for the year ended December 31. Round to the nearest dollar.

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I have one point to be mentioned. There is a "set-up" mistake in the given Excel sheet for the 1st journal entry. The totals, irrespective of its ...

Solution Summary

The cost of assets are determined. The fence around the boundary of the property are examined.

$2.19