E7-32B. (Learning Objectives 1, 2: Measuring, depreciating, and reporting PPE) During 20X6, Lao Book Store paid €489,000 for land and built a store in Lisbon. Prior to construction, the city of Lisbon charged Tao €1,600 for a building permit, which Lao paid. Lao also paid

€15,700 for architect’s fees. The construction cost of €210,000 was financed by a long-term note payable, with interest cost of €30,100 paid at completion of the project. The building was completed on September 30, 20X6. Lao depreciates the building by the straight-line method over 35 years, with estimated residual value of €344,000.

1. Journalize transactions for:

a. Purchase of the land

b. All the costs chargeable to the building in a single entry

c. Depreciation on the building Explanations are not required.

2. Report Lao Book Store’s PPE on the company’s Balance Sheet at December 31, 20X6.

3. What will Lao’s Income Statement for the year ended December 31, 20X6, report for this situation?