Question 4 (continued) Part C (14 marks) At December 31, 2020, certain accounts included in the property, plant, and equipment section of Hill Corporations balance sheet had the following balances Land $1,200,000 Buildings 2,600,000 Leasehold improvements 1,600,000 Machinery and equipment 3,200,000 During 2021, the following transactions occurred A tract of land (site 101) with a building was acquired for $1,200,000 The closing statement indicated that the land value was $800,000 and the building value was $400,000 Shortly after acquisition, the building was demolished at a cost of $80,000 A new building was constructed for $600,000 plus the following costs Excavation fees 24,000 Architectural design fees 32,000 Building permit fee 8,000 The building was completed and occupied on September 30, 2021 Extensive work was done to a building occupied by Hill under a lease agreement that expires on December 31, 2030 The total cost of the work was $500,000, as follows Cost Useful life item (years) Painting of ceilings $ 20,000 1 Electrical work 180,000 10 Construction of extension to current working area 300,000 25 $500,000 The lessor paid half the costs incurred for the extension to the current working area A group of new machines was purchased subject to a royalty agreement, which requires payment of royalties based on units of production for the machines The invoice price of the machines was $540,000, freight costs were $4,000, unloading costs were $6,000, and royalty payments for 2021 were $88,000 Required Disregard the related accumulated depreciation accounts Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2021 a Land b Buildings c Leasehold improvements d Machinery and equipment Question 4 Part C (continued) Analysis of Land Account Balance at January 1, 2021 $1,200,000 Balance at December 31, 2021 Ana lysis of Buildings Account Balance at January 1, 2021 $2,600,000 Balance at December 31, 2021 Analysis of Leasehold Improvements Account Balance at January1, 2021 $1,600,000 Balance at December 31, 2021 Analysis of Machinery and Equipment Account Balance at January 1, 2021 $3,200,000 Balance at December 31, 2021

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Question 4 (continued) Part C. (14 marks) At December 31, 2020, certain accounts included in the property, plant, and equipment section of Hill Corporations balance

Question 4 (continued)

Part C. (14 marks)

At December 31, 2020, certain accounts included in the property, plant, and equipment section of Hill Corporations balance sheet had the following balances:

Land $1,200,000

Buildings 2,600,000

Leasehold improvements 1,600,000

Machinery and equipment 3,200,000

During 2021, the following transactions occurred:

A tract of land (site 101) with a building was acquired for $1,200,000. The closing statement indicated that the land value was $800,000 and the building value was $400,000. Shortly after acquisition, the building was demolished at a cost of $80,000.

A new building was constructed for $600,000 plus the following costs:

Excavation fees 24,000

Architectural design fees 32,000

Building permit fee 8,000

The building was completed and occupied on September 30, 2021.

Extensive work was done to a building occupied by Hill under a lease agreement that expires on December 31, 2030. The total cost of the work was $500,000, as follows:

	Cost	Useful life item (years)
Painting of ceilings	$ 20,000	1
Electrical work	180,000	10
Construction of extension to current working area	300,000	25
	$500,000

The lessor paid half the costs incurred for the extension to the current working area.

A group of new machines was purchased subject to a royalty agreement, which requires payment of royalties based on units of production for the machines. The invoice price of the machines was $540,000, freight costs were $4,000, unloading costs were $6,000, and royalty payments for 2021 were $88,000.

Required:

Disregard the related accumulated depreciation accounts. Prepare a detailed analysis of the changes in each of the following balance sheet accounts for 2021: a. Land b. Buildings c. Leasehold improvements d. Machinery and equipment.

Question 4 Part C. (continued)