Lawson Furniture purchased land paying 65000 cash and signin

Lawson Furniture purchased land, paying $65,000 cash and signing a $250,000 note payable. In addition, Lawson 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. Read the requirements. Requirement 1. Determine the cost of the land, land improvements, and building The cost of the land is S Requirements 1. Determine the cost of the land, land improvements, and building. 2. Which of these assets will Lawson depreciate? Print Done

Solution

Land cost =65000+250000+5000+9000 =329000

Building = 400000+54000=454000

Building will be eligible for depreciation.

Delinquent tax are capitalise because property rights will not be transferred unless it is paid.

Light and signboard will not create additional value.

Fencing is generally capitalise because it will have economic benefits for more than a year