Preview File Edit View Go Tools Window Help CH 10 Property, Plant and Equipment.pdf Page 42 of 50 - Edited CH 10 Property... 36 24 D A Search 31 37 38 39 P10-5 (Classification of Costs and Interest Capitalization) On January 1, 2015, Blair Corporation pur- chased for $500,000 a tract of land (site number 101) with a building. Blair paid a real estate broker's com- mission of $36,000, legal fees of $6,000, and title guarantee insurance of $18,000. The closing statement in- dicated that the land value was $500,000 and the building value was $100,000. Shortly after acquisition, the building was razed at a cost of $54,000. Blair entered into a $3,000,000 fixed-price contract with Slatkin Builders, Inc. on March 1, 2015, for the construction of an office building on land site number 101. The building was completed and occupied on September 30, 2016. Additional construction costs were incurred as follows. Plans, specifications, and blueprints Architects' fees for design and supervision $21,000 82,000 The building is estimated to have a 40-year life from date of completion and will be depreciated using the 150% declining-balance method. To finance construction costs, Blair borrowed $3,000,000 on March 1, 2015. The loan is payable in 10 annual installments of $300,000 plus interest at the rate of 10%. Blair's weighted-average amounts of ac- cumulated building construction expenditures were as follows. For the period March 1 to December 31, 2015 For the period January 1 to September 30, 2016 $1,300,000 1,900,000 40 40 41 41 42 Tue 10 Oct 7:38 PM 484 Chapter 10 Acquisition and Disposition of Property, Plant, and Equipment Instructions (a) Prepare a schedule that discloses the individual costs making up the balance in the Land account in respect of land site number 101 as of September 30, 2016. (b) Prepare a schedule that discloses the individual costs that should be capitalized in the Buildings account as of September 30, 2016. Show supporting computations in good form. 2 881 OCT 10 3 A N W X