The following payments and receipts are related to land

land
The following payments and receipts are related to land, land improvements, and buildings
acquired for use in a wholesale apparel business. The receipts are identified by an asterisk.a.
Architect's and engineer's fees for plans and supervision ...................................... $ 80,000b.
Cost of filling and rading land ....................................................................... 30,000c. Cost of
removing building purchased with land in (e) ............................................ 10,000d. Cost of
paving parking lot to be used by customers .............................................. 25,000e. Cost of real
estate acquired as a plant site: Land ($375,000) and Building ($25,000) ...... 400,000f. Cost of
repairing windstorm damage during construction ......................................... 5,000g. Cost of
repairing vandalism damage during construction ......................................... 1,800h. Cost of
trees and shrubbery planted ............................................................. 12,000i. Delinquent real
estate taxes on property, assumed by purchaser ................................ 20,000j. Fee paid to
attorney for title search ............................................................... 3,000k. Finder's fee paid to real
estate agency ............................................................ 4,000l. Interest incurred on building loan
during construction .............................................. 40,000m. Money borrowed to pay building
contractor ................................................... 775,000*n. Payment to building contractor for new
building ................................................ 750,000o. Proceeds from insurance company for
windstorm and vandalism damage .................... 3,600*p. Premium on one-year insurance policy
during construction ..................................... 7,500q. Proceeds from sale of salvage materials
from old building ...................................... 4,000*r. Refund of premium on insurance policy (p)
canceled after 10 months ........................ 1,250*s. Special assessment paid to city for extension
of water main to the property ................. 10,500Instruction1. Assign each payment and receipt
to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Indicate
receipts by an asterisk. Identify each item by letter and list the amounts in columnar form, as
follows:2. Determine the increases to Land, Land Improvements, and Building.3. The costs
assigned to the land, which is used as a plant site, will not be depreciated, while the costs
assigned to land improvements will be depreciated. Explain this seemingly contradictory
application of the concept of depreciation.View Solution: The following payments and receipts
are related to land land
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