Answer:
Building:
cost of bulding 25,100
write-off demolished building <u>(25,100)</u>
Balance: 0
Building under construction:
exacavation cost 13,100
architect's fees 32,100
contractor <u>640,100</u>
Balance: 685,300
Land:
acquisition cost 255,100
property taxes paid at purchase<u> 2,180</u>
Balance: 257,280
Land improvements:
parking lot and driveways 28,100
fences <u> 5,810</u>
balance 33,910
period cost:
demolition expense 24,100
salvage from demolition (11,000)
property taxes expense 5810
loss at disposal (building) <u> 25,100</u>
balance: 44,010
Explanation:
For building and land we should follow the accounting procedure of include all the incurred or assumed cost to contruct and leave it ready to use.
As there is no indication that construction was completed we should assume the building is under construction.
As we demolish the old building we should write-off and recognize the loss and the demolition expense.
The property taxes after the purcahse are cost of the period.
Before the taxes were a necessary cost to acquire the land.
The salvage from the demolition decrease the expense are not considered revenue.
