Refund of premium on insurance policy (h) canceled after 11 months 317 Required: 1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or Other Accounts. Choose the correct account from the dropdown list for each letter and enter the appropriate amount. Enter receipts as negative amounts using the minus sign. Item Account Amount Land 2,800 a. b Land 679,000 x C. Land d. Land e. Land f. Land 9. Building Building Land Other Accounts k. Other Accounts 1 Land Improvements m. Land Improvements n. Land Improvements o. Other Accounts D. Other Accounts P Other Accounts a Building Building Building S 2. Determine the amount debited to Land, Land Improvements, and Building Land Land Improvements Building 3. Since land used as a plant site does not lose its ability to provide services, it is not depreciated. Land improvements do lose their ability to provide services as time passes and are, therefore, depreciated 4. What would be the effect on the current year's income statement and balance sheet if the cost of filing and grading land of $15,900 (payment (0) was incorrectly classified as Land Improvements rather than Land? Assume that Land Improvements are depreciated over a 20-year life using the double-declining balance method. Depreciation expense would be overstated & Land improvements would be overstated. Feedback Check My Work Remember that in addition to purchase price, costs of acquiring fixed assets include all amounts spent getting the asset in place and ready for use. Consider how receipts affect the accounts. Recall that land improvements have a limited life but are capitalized. Costs incurred to ready the asset for use are added to the asset account, Unnecessary costs that do not increase the asset's usefulness are expensed. Materials salvaged and sold during the process of building reduce the cost of the asset as do returns from cancelled insurance polides. Consider what accounts are involved and how expenses affect the income statement and the balance sheet. Review the difference between land and land improvements, Next Check My Work