Question 1: PDX Co. purchased land, paying $65,000 cash and signing a $250,000 note payable. In addition, PDX paid delinquent property tax of $5,000, title insurance costing $4,000, and $9,000 to level the land and remove an unwanted building. The company then constructed an office building at a cost of $400,000. It also paid $54,000 for a fence around the property, $12,000 for a sign near the entrance, and $8,000 for special lighting of the grounds. Requirements 1. Determine the cost of the land, land improvements, and building. 2. Which of these assets will PDX depreciate?

Question 2: DFW Co. purchased a building for $540,000 and depreciated it on a straight-line basis over a 40-year period. The estimated residual value is $100,000. After using the building for 15 years, DFW realized that wear and tear on the building would wear it out before 40 years and that the estimated residual value should be $88,000. Starting with the 16th year, DFW began depreciating the building over a revised total life of 35 years using the new residual value. Journalize depreciation expense on the building for years 15 and 16.