( 1 Land ( 2 ) Buildings Sandhill Sporting Goods Inc . has been experiencing growth in the dem and for its products over last several years . The last two Olympic Ga greatly increased the popular larity of basketball (3 ) Machinery n sports retailing consortium m entered into an ag with Sandhill's Roundball Division to purchase basketballs and other accessories on an increasing with Sandhill's Roundball Division to purchase ba basis over the next 5 years To be able to meet the quantity co mmitments of thi ments of this agreement , Sandhill had to obtain additional manufacturing capaci Y . A real estate firm located an available factory in cl able factory in close proximity to Sandhill 's Roundball manufacturing facility , and Sandhill a Sandhill agreed to purchase the factory and used machinery from Encino Athletic Equipment Com Company on October 1 2016 . Renovations were Calculate Sandhill Sporting Goods Inc 's 2018 depreciation expense , for book purposes , for each of necessary to convert the factory for Sandhill 's manufacturing use the properties acquired from Encino Athletic Equipment Company The terms of the agreement required Sandhill to pay Encino $51 060 when renovations started on Depreciation Expense January 1 2017 , with the balance to be paid id as renovations were completed . The overall purchase price for the factory and machinery was $ 408 090 . The building renovations were contracted to Malone Construction at $102 000 . The payments made , as renovations progressed during 2017 , ( 1 ) Land are shown below . The factory was placed in service on January 1 , 2018 ( 2 ) Buildings no $51 000 591 800 51 12 200 $153 , 100 ( 3 ) Machine On January 1 2017 Sandhill secured a $510 090 line of - credit with a 12% interest rate to fi the purchase cost of the factory and machinery , an and the renovation costs . Sandhill drew down o the line - of - credit to meet the payment schedule shown above ; this was Sandhill's only outstanding loan during 2017 Bob Sprague , Sandhill 's controller , will capitalize the maximum allowable interest costs for this project . Sandhill's policy regarding purchases of this nature is to use the appraisal value of the land for book purposes and prorate the balance of the purchase price over the remaining items . The building had originally cost Encino $306 090 and had a net book value of $51 000 , while the machinery originally cost $127 500 and had a net book value of $ 40 800 on the date of sale . The land was recorded on Encino's books at $40 , 890 . An appraisal isal , conducted by independent appraisers at the time of acquisition , valued the land at $295 , 800 , the building at $107 100 , and the machinery at $45, 900 Angie Justice , chief engineer , estima timated that the renovated plant would be used for 15 years , with an estimated salvage value of $30 , 600 . Justice estimated that the productive machinery would have a remain Vage value of $3 060 . Sandhill 's depreciation policy no useful life of 5 years and a salvage value of $3 060 Sandhill's depreciation specifies the 200% declining - balance method for m in the year the plant is placed method for the plant . One -half year's depreciation is taken in the year the plant is placed in and one half year is allowed when the property is dispo If year is allowed 2 360 - day year for calculating interest costs books of Sandhill Sporting Goods Inc . as of December 31 201 , for each of the following properties acquired from Encino Athletic Equip ber 31 2017 for Company ( Round intermediate calculations to S decimal places for compute computational 1.5468 7 and final ans were to O deci
