McMillan Tire Inc. operates in several provinces. The head office incurred the following costs in acquiring land and a building, making land improvements, and constructing and furnishing a garage showroom:

a. Purchase price of land, including a building that will be enlarged to be a warehouse (land fair value is $150,000; building fair value is $50,000) ................. ................$180,000

b. Fence around the land ..................................................................................... 26,000

c. Company signs near front and rear approaches to the company property ....... 25,000

d. Title insurance on the land acquisition ............................................................. 1,200

e. Renovation of the warehouse ........................................................................... 21,300

f. Landscaping (additional dirt and earth moving) ............................................... 3,550

g. Architect fee for the design of the garage/showroom ....................................... 45,000

h. Building permit for the building ........................................................................ 200

i. Delinquent real estate taxes on the land to be paid by McMillan ........................ 3,700

j. Concrete, wood, and other materials used in the construction of the

garage/showroom ................................................................................................... 322,000

k. Supervisory salary of construction supervisor (90% to garage/showroom,

6% to land improvements, and 4% to building renovation) .................................... 55,000

l. Landscaping (trees and shrubs) ............................................................................. 5,350

m. Masonry, carpentry, roofing, and other labour to construct

the garage/showroom ................................................................................................. 234,000

n. Lights for the parking lot, walkways, and company signs .................................. 8,900

o. Parking lots and concrete walks on the property ................................................ 17,450

p. Interest cost on construction loan for garage/showroom .................................... 3,300

q. Installation of equipment ..................................................................................... 8,000

r. Equipment for the garage/showroom ...................................................................... 80,000

McMillan Tire depreciates buildings over 40 years, land improvements over 10 years, and equipment over 8 years, all on a straight-line basis with zero residual value.

Requirements

1. Determine the total cost of each asset. Set up columns for Land, Land Improvements, Garage/Showroom, Warehouse, and Equipment. Decide how to account for each of McMillan's costs by listing the cost under the correct account.

2. All construction was complete and the assets were placed in service on March 29. Record depreciation for the year ended December 31. Round figures to the nearest dollar.

3. Identify the issues of this problem, and discuss how your decisions would affect the results of McMillan Tire Inc.