6,000 5.400 5/1/12 PRACTICE PROBLEMS IN CHAPTERS 10 AND 11 Intermediate Accounting! 1-138 Capitalizing acquisition costs. Gibbs Manufacturing Co. was incorporated on 1/2/12 but was unable to begin manufacturing activities until 8/1/12 because new factory facilities were not completed until that date. The Land and Buildings account at 12/31/12 per the books was as follows: Date. Amount 1/31/12 Land and dilapidated building $200,000 2/28/12 Cost of removing building 4,000 4/1/12 Legal fees 5/1/12 Fire insurance premium payment 5/1/12 Special tax assessment for streets 4.500 Partial payment of new building construction 170,000 8/1/12 Final payment on building construction 170,000 8/1/12 General expenses 30,000 12/31/12 Asset write-up 75.000 5664.900 Additional information: 1. To acquire the land and building on 1/31/12, the company paid $100,000 cash and 1,000 shares of its common stock (par value - S100/share) which is very actively traded and had a fair value per share of $140. 2 When the old building was removed. Gibbs paid Kwik Demolition Co. $4,000, but also received $1.500 from the sale of salvaged material 3. Legal fees covered the following Cost of organization $2,500 Examination of title covering purchase of land 2,000 Legal work in connection with the building construction 1.300 S6.000 4. The fire insurance premium covered premiums for a three-year term beginning May 1, 2012 S. General expenses covered the following for the period 1/2/12 to 8/1/12 President's salary $20,000 Plant superintendent covering supervision of new building 10.000 $30.000 6. Because of the rising land costs, the president was sure that the land was worth at least $75,000 more than what it cost the company Instructions Determine the proper balances as of 12/31/12 for a separate land account and a separate buildings account. Use separate T- accounts (one for land and one for buildings) labeling all the relevant amounts and disclosing all computations