For the year ended December 31, 2018, Westlake Ltd. had the following transactions related to the purchase of property. Assume all transactions are for cash unless otherwise stated.
Feb. 7 Purchased real estate for $1.1 million, paying $300,000 cash and signing a mortgage payable for the balance. The site had an old building on it and the current values of the land and building were $1 million and $100,000, respectively. The old building will be demolished and a new apartment building will be constructed on the site.
9 Paid legal fees of $22,000 on the real estate purchase of February 7.
15 Paid $60,000 to demolish the old building and make the land ready for the construction of the apartment building.
16 Received $16,000 from the sale of material from the demolished building.
28 Paid $4,000 to grade the land in preparation for the construction of the apartment building.
Mar. 2 Paid architect fees of $72,000 to design the apartment building.
July 2 The full cost for construction of the apartment building was $2.6 million. Paid $680,000 cash and signed a bank loan payable for the balance.
3 Purchased a one-year insurance policy on the finished building for $10,000.
Aug. 29 Paid $48,000 for the paving of sidewalks and a parking lot for the building.
Instructions
(a) Record the above transactions.
(b) Determine the cost of the land, land improvements, and building that will appear on Westlake's December 31 statement of financial position.
(c) When would depreciation begin on the depreciable assets recorded above?