Ex. 10-3 Capitalizing acquisition costs. Myers Manufacturing Co. was incorporated on 1/2/07 but because new factory facilities were not completed until that date. The Land and books was as follows was unable to begin manufacturing activities until 8/1/07 Date 1/31/07 2/28/07 4/1/07 5/1/07 5/1/07 5/1/07 8/1/07 8/1/07 12/31/07 Item Land and dilapidated building Cost of removing building Legal fees Fire insurance premium payment Special tax assessment for streets Partial payment of new building construction Final payment on building construction General expenses Asset write-up $200,000 4,000 6,000 5,400 4,500 150,000 150,000 30,000 624,900 Additional information 1. To acquire the land and building on 1/31/07, the company paid $100,000 cash and 1,000 shares of its common 2. When the old building was removed, Myers paid Kwik Demolition Co. $4,000, but also received $1,500 from the stock (par value $100/share) which is very actively traded and had a market value per share of $170. 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 1500 4. The fire insurance premium covered premiums for a three-year term beginning May 1, 2007. 5. General expenses covered the following for the period X/07 to 8/1/07 President's salary $20,000 Plant superintendent covering supervision of new building 10.000 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. 6. Instructions Determine the proper balances as of 12/31/07 for a separate land account and a separate building account. Use separate T-accounts (one for land and one for building) labeling all the relevant computations. Solution 10-3 amounts and disclosing all GENERAL LEDGER ACCOUNTS Land Building