Natural Resources Inc (NRI) purchases freehold LAND with a building for $1,350,000 in order to construct a new building for their headquarters on 1 1 year 1 They spend $210,000 to tear down the old building and $50,000 in legal fees to transfer ownership of the property Subsequently, NRI pays $3,220,000 to construct their new headquarters building estimated to last 20 years with a $150,000 salvage value The company uses the straight line method of depreciation Assume land is free hold Calculate the initial book value of the land Calculate the book value of the building at its inception (beginning) What is the amount of depreciation on the land for the first year What is the amount of depreciation on the building for the first year After 4 years (day 1 of year , the total life of the headquarters building is revised to 25 years What is the book value of the building on this date NRI sells the building and land on July 1, year 8 for $3,000,000 Assume that of the sale price, $1,500,000 is related to the sale of land and $1,500,000 is for the sale of the building Calculate the amount of depreciation for year 8 Also show the impact on the accounts related to the sale of the land and building

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Natural Resources Inc (NRI) purchases freehold LAND with a building for $1,350,000 in order to construct a new building for their headquarters on 1/1 year

Natural Resources Inc (NRI) purchases freehold LAND with a building for $1,350,000 in order to construct a new building for their headquarters on 1/1 year 1. They spend $210,000 to tear down the old building and $50,000 in legal fees to transfer ownership of the property. Subsequently, NRI pays $3,220,000 to construct their new headquarters building estimated to last 20 years with a $150,000 salvage value. The company uses the straight-line method of depreciation. Assume land is free-hold.

Calculate the initial book value of the land.

Calculate the book value of the building at its inception (beginning).

What is the amount of depreciation on the land for the first year?

What is the amount of depreciation on the building for the first year?

After 4 years (day 1 of year , the total life of the headquarters building is revised to 25 years. What is the book value of the building on this date?

NRI sells the building and land on July 1, year 8 for $3,000,000. Assume that of the sale price, $1,500,000 is related to the sale of land and $1,500,000 is for the sale of the building. Calculate the amount of depreciation for year 8. Also show the impact on the accounts related to the sale of the land and building.