At December 31 2016 certain accounts included in the propert

At December 31, 2016, certain accounts included in the property, plant, and equipment section of Vaughn Company’s balance sheet had the following balances.

During 2017, the following transactions occurred.

1. Land site number 621 was acquired for $856,100. In addition, to acquire the land Vaughn paid a $51,800 commission to a real estate agent. Costs of $41,500 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for $15,400.

2. A second tract of land (site number 622) with a building was acquired for $422,400. The closing statement indicated that the land value was $302,100 and the building value was $120,300. Shortly after acquisition, the building was demolished at a cost of $40,900. A new building was constructed for $328,200 plus the following costs.

Excavation fees $37,600

Architectural design fees 10,900

Building permit fee 2,500

Imputed interest on funds used during construction (stock financing) 8,400

he building was completed and occupied on September 30, 2017.

3. A third tract of land (site number 623) was acquired for $645,800 and was put on the market for resale.

4. During December 2017, costs of $89,800 were incurred to improve leased office space. The related lease will terminate on December 31, 2019, and is not expected to be renewed. (Hint: Leasehold improvements should be handled in the same manner as land improvements.

(a) Calculate the balance at December 31, 2017 in each of the following balance sheet accounts. Disregard the related accumulated depreciation accounts.

Land= ?

Buildings= ?

Leasehold improvements= ?

Equipment= ?

Solution

Since site 623 is purchased for resale, it is considered inventory rather a fixed asset and hence excluded from Property plant and equipment