D. Capitalizing acquisition costs. (Critical Thinking and Writing Skills) Gibbs Manufacturing Co. was incorporated on 1/2/20 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 12/31/20 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 Examination of title covering purchase of land Legal work in connection with the building construction $2,500 2,000 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 Plant superintendent covering supervision of new building $20,000 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 1. Explain the accounting situation in Gibbs Manufacturing Co. general ledger related to fixed assets 2. How the situation is fix? 3. Explain the transaction of December 31, 2020 and present the correct accounting entry. 4. 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.