Capitalized costs for long-term assets (Learning Objective 2) 10–15 min.

Pierce Systems purchased land, paying $65,000 cash as a down payment and signing a $260,000 note payable for the balance. In addition, Pierce Systems paid delinquent property tax of $3,500, title insurance costing $1,500, and an $8,800 charge for leveling the land and removing an unwanted building. The company constructed an office building on the land at a cost of $800,000. It also paid $55,000 for a fence around the property, $8,000 for the company sign near the entrance, and $10,000 for special lighting of the grounds.

Requirements 1. Determine the cost of the company’s land, land improvements, and building.

2. Which of the assets will Pierce depreciate?

AppendixLO1