For the year ended December 31, 2018, Kadmen Ltd. incurred the following transactions related to the purchase of a property. Assume all transactions are for cash unless otherwise stated.
Jan. 22 Purchased real estate for a future plant site for $880,000, paying $220,000 cash and signing a mortgage payable for the balance. There was an old building on the site and the current values of the land and building were $680,000 and $200,000, respectively. The old building will be demolished and a new plant will be constructed on the site.
24 Paid legal fees of $18,000 on the real estate purchase of January 22.
31 Paid $100,000 to demolish the old building to make room for the new plant.
Feb. 13 Graded and filled the land at a cost of $32,000 in preparation for the construction.
28 Received $30,000 from the sale of material from the demolished building.
Mar. 14 Paid $136,000 in architect fees for the building plans.
Apr. 20 Paid excavation costs for the new building of $68,000.
June 15 Received a bill from the building contractor for half of the cost of the new building, $1.2 million. Paid $300,000 cash and signed a bank loan payable for the balance.
Sept. 28 Received a bill for the remaining $1.2 million owed to the building contractor to complete the construction of the new building. Paid $400,000 cash and signed a bank loan payable for the balance.
Oct. 1 Paved the parking lots, driveways, and sidewalks for $168,000.
Instructions
(a) Record the above transactions.
(b) Determine the cost of the land, land improvements, and building that will appear on Kadmen's December 31 statement of financial position.
(c) When would depreciation begin on the depreciable assets recorded above?