D$.$ Capitalizing acquisition costs. $($Critical Thinking and Writing Skills$)$

Gibbs Manufacturing Co$.$ was incorporated on $1/2/23$ but was unable to begin manufacturing activities until $8/1/20$ because new factory facilities were not completed until that date. The Land and Buildings account at $12/31/23$ per the books was as follows:

Date Item Amount

$1/31/20$ Land and dilapidated building $$200,000$

$2/28/20$ Cost of removing building $4,000$

$4/1/20$ Legal fees $6,000$

$5/1/20$ Fire insurance premium payment $5,400$

$5/1/20$ Special tax assessment for streets $4,500$

$5/1/20$ Partial payment of new building construction $210,000$

$8/1/20$ Final payment on building construction $210,000$

$8/1/20$ General expenses $30,000$

$12/31/20$ Asset write$-$up $75,000$

$$744,900$

Additional information:

$1.$ To acquire the land and building on $1/31/20,$ the company paid $$100,000$ cash and $1,000$ shares of its common stock $($par value $=$ $$100/$share$)$ which is very actively traded and had a fair value per share of $$180.$

$2.$ 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 $1,500$

$$6,000$

$4.$ The fire insurance premium covered premiums for a three$-$year term beginning May $1,2020.$

$5.$ General expenses covered the following for the period $1/2/20$ to $8/1/20.$

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 $12/31/20$ for fixed assets. Use separate T$-$accounts labeling all the relevant amounts and disclosing all computations