Problem 10-5

On January 1, 2020, Tamarisk Corporation purchased for $590,000 a tract of land (site number 101) with a building. Tamarisk paid a real estate brokers commission of $42,480, legal fees of $7,080, and title guarantee insurance of $21,240. The closing statement indicated that the land value was $590,000 and the building value was $118,000. Shortly after acquisition, the building was razed at a cost of $63,720. Tamarisk entered into a $3,540,000 fixed-price contract with Slatkin Builders, Inc. on March 1, 2020, for the construction of an office building on land site number 101. The building was completed and occupied on September 30, 2021. Additional construction costs were incurred as follows.

Plans, specifications, and blueprints		$24,780
Architects fees for design and supervision		96,760

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, Tamarisk borrowed $3,540,000 on March 1, 2020. The loan is payable in 10 annual installments of $354,000 starting on March 1, 2021, plus interest at the rate of 10%. Tamarisks weighted-average amounts of accumulated building construction expenditures were as follows.

For the period March 1 to December 31, 2020		$1,534,000
For the period January 1 to September 30, 2021		2,242,000

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, 2021.

TAMARISK CORPORATION Cost of Land (Site #101) As of September 30, 2021
Interest Capitalized During 2020Fixed Construction Contract PricePlans, Specifications, and BlueprintsCost of Land and Old BuildingArchitects FeesInterest Capitalized During 2021Cost of BuildingReal Estate Brokers CommissionLegal FeesTitle InsuranceRemoval of Old BuildingCost of Land		$
Plans, Specifications, and BlueprintsArchitects FeesFixed Construction Contract PriceInterest Capitalized During 2020Cost of Land and Old BuildingInterest Capitalized During 2021Real Estate Brokers CommissionCost of BuildingLegal FeesTitle InsuranceCost of LandRemoval of Old Building
Plans, Specifications, and BlueprintsTitle InsuranceArchitects FeesInterest Capitalized During 2020Cost of BuildingInterest Capitalized During 2021Real Estate Brokers CommissionCost of Land and Old BuildingLegal FeesRemoval of Old BuildingCost of LandFixed Construction Contract Price
Plans, Specifications, and BlueprintsInterest Capitalized During 2021Legal FeesReal Estate Brokers CommissionCost of BuildingCost of Land and Old BuildingTitle InsuranceRemoval of Old BuildingCost of LandFixed Construction Contract PriceArchitects FeesInterest Capitalized During 2020
Cost of BuildingInterest Capitalized During 2020Title InsuranceInterest Capitalized During 2021Removal of Old BuildingCost of LandLegal FeesReal Estate Brokers CommissionCost of Land and Old BuildingFixed Construction Contract PricePlans, Specifications, and BlueprintsArchitects Fees
Interest Capitalized During 2020Real Estate Brokers CommissionLegal FeesFixed Construction Contract PriceArchitects FeesCost of LandPlans, Specifications, and BlueprintsInterest Capitalized During 2021Cost of BuildingTitle InsuranceCost of Land and Old BuildingRemoval of Old Building		$

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Prepare a schedule that discloses the individual costs that should be capitalized in the office building account as of September 30, 2021.

TAMARISK CORPORATION Cost of Building As of September 30, 2021
Architects FeesRemoval of Old BuildingCost of BuildingPlans, Specifications, and BlueprintsTitle InsuranceCost of LandLegal FeesInterest Capitalized During 2020Fixed Construction Contract PriceInterest Capitalized During 2021Cost of Land and Old BuildingReal Estate Brokers Commission		$
Cost of Land and Old BuildingFixed Construction Contract PriceRemoval of Old BuildingTitle InsuranceCost of LandReal Estate Brokers CommissionPlans, Specifications, and BlueprintsArchitects FeesInterest Capitalized During 2021Interest Capitalized During 2020Cost of BuildingLegal Fees
Interest Capitalized During 2021Cost of BuildingPlans, Specifications, and BlueprintsInterest Capitalized During 2020Architects FeesCost of Land and Old BuildingReal Estate Brokers CommissionLegal FeesTitle InsuranceFixed Construction Contract PriceRemoval of Old BuildingCost of Land
Interest Capitalized During 2020Interest Capitalized During 2021Legal FeesTitle InsuranceArchitects FeesRemoval of Old BuildingCost of Land and Old BuildingCost of LandFixed Construction Contract PriceCost of BuildingReal Estate Brokers CommissionPlans, Specifications, and Blueprints
Interest Capitalized During 2020Title InsuranceReal Estate Brokers CommissionCost of Land and Old BuildingPlans, Specifications, and BlueprintsArchitects FeesCost of LandFixed Construction Contract PriceCost of BuildingLegal FeesInterest Capitalized During 2021Removal of Old Building
Real Estate Brokers CommissionFixed Construction Contract PricePlans, Specifications, and BlueprintsArchitects FeesTitle InsuranceCost of LandRemoval of Old BuildingInterest Capitalized During 2020Interest Capitalized During 2021Cost of BuildingCost of Land and Old BuildingLegal Fees		$