1.) Given this information, determine the Original Cost of the Land.

2.) determine the Historical Costof the building after taking into consideration the capitalization of interest.

3.)Cactus Construction, Co., is building a new company headquarters. When considering the Historical Cost of this building, any overhead costs incurred in this construction should be which one of the folwing

a.) allocated on the basis of lost production

B.)eliminated completely from the cost of the asset

C.)allocated on an opportunity cost basis

D.)allocated on a pro rata basis between the asset and normal operations

4.) determine the Interest Expense that Desert would report on their Income Statement for the year ended December 31, 2018.

5.) assume instead that Desert's only other outstanding debt during 2018 was a $450,000, 9%, three year note (i.e. all other information remains unchanged but Desert no longer has $3,000,000 of other non-specific borrowings; only $450,000 of non-specific debt).

Determine the Avoidable Interest from this construction project under this scenario.

6.)nWhen computing the historical cost of land purchased for a new headquarters site, Desert, Co. must classify the following components as a part of the historical cost for (1) the land or (2) the land improvements?

Title and recording fees for purchase of the land Land

Demolishing the existing building on the land Land

Planting large trees and other landscaping Land Improvements

Installing a sprinkler system for the new landscaping Land Improvements

Early in 2018, Desert, Co. finalized plans to expand operations. The first stage was completed on January 19th with the purchase of a tract of land to be used as the location for their new office complex. The land and existing building were purchased for $850,000, paying cash. Title search, title insurance, back property taxes and other closing costs totaling $20,000 were paid at closing During February, the old building was demolished at a cost of $70,000, and an additional $50,000 was paid to clear and grade the land. Salvaged materials from the demolished building were sold for proceeds of $20,000. Construction of the new office complex began on March 1 and was completed on November 30, 2018. Construction expenditures paid to sub-contractors were made as follows: March 1 $ 900,000 June 1 $1,200,000 Sept 1$1,500,000 Nov 1 $1,800,000 Desert borrowed a $2,100,000, 8%, 2-year note on February 1st to help finance construction. Interest will be paid annually. The company's only other outstanding debt during all of 2018 was a $3,000,000, 996, 10-year note payable. In December, the company purchased equipment and furniture for a lump-sum price of $500,000 The fair values of the equipment and furniture were $455,000 and $245,000, respectively. Early in 2018, Desert, Co. finalized plans to expand operations. The first stage was completed on January 19th with the purchase of a tract of land to be used as the location for their new office complex. The land and existing building were purchased for $850,000, paying cash. Title search, title insurance, back property taxes and other closing costs totaling $20,000 were paid at closing During February, the old building was demolished at a cost of $70,000, and an additional $50,000 was paid to clear and grade the land. Salvaged materials from the demolished building were sold for proceeds of $20,000. Construction of the new office complex began on March 1 and was completed on November 30, 2018. Construction expenditures paid to sub-contractors were made as follows: March 1 $ 900,000 June 1 $1,200,000 Sept 1$1,500,000 Nov 1 $1,800,000 Desert borrowed a $2,100,000, 8%, 2-year note on February 1st to help finance construction. Interest will be paid annually. The company's only other outstanding debt during all of 2018 was a $3,000,000, 996, 10-year note payable. In December, the company purchased equipment and furniture for a lump-sum price of $500,000 The fair values of the equipment and furniture were $455,000 and $245,000, respectively