Compact Construction Company (CCC) started the construction of twin office towers in20x0 and finished on February 28, 20x1. It incurred the following costs:

Land $100,000

Farmhouse on the land 20,000

Cost of demolishing farmhouse 1,100

Cost of leveling the land 3,000

Cost of digging to lay the foundation 25,000

Cost of building both towers 700,000

Landscaping 10,000

Insurance during construction 2,500

Cost of paving parking lot 20,000

Cost of party for workers when buildings were completed 1,200

Commission to agent to rent Tower A 3,000

Cost of special ceiling in Tower A to accommodate new tenant 2,000

Cost of CCC move to Tower B 3,300

Cost to reconstruct a wall accidentally destroyed by a truck during construction 2700

CCC received $1,800 from the sale of materials obtained from demolishing the farmhouse.

CCC leased Tower A to a computer company on March 1, 20x1. On June 1, 20x1, CCCmoved into Tower B after deciding to locate its new offices there. On October 1, 20x1,because it was not able to use all of Tower B, CCC moved to a smaller location anddecided to lease Tower B. As of December 31, 20x1, no tenant had been found.

CCC uses the straight-line method to depreciate its buildings. These towers have anestimated life of 50 years and no residual value. The parking lot has an estimated life of 5years.

Required -a) Calculate the cost of the fixed assets to be shown on the balance sheet.

b) Calculate the depreciation expense that CCC would report on its financial statementsfor December 31, 20x1.