On January 1, 2008, Blair Corporation purchased for $500,000 atract of land (site number 101) with a building. Blair paid a realestate broker's commission of $36,000, legal fees $6,000, and titleguarantee insurance $18,000. The closing statement indicatedthat the land value was $500,000 and the building value was$100,000. Shortly after acquistion, the building was razed ata cost of $54,000.
Blair entered into a $3,000,000 fixed-price contract withSlatkin Builders, Inc. On March 1, 2008, for the construction of anoffice building on land site number 101. The building wascompleted and occupied on September 30, 2009. Additionalconstruction costs were incurred as follows.
Plans,specifications, andblueprints $21,000
Architects' fees for design andsupervision 82,000
The building is estimated to have a 40 year life from date ofcompletion and will be depreciated using the 150% declining-balance method.
To finance construction costs, Blair borrowed $3,000,000 on March 1,2008. The loan is payable in 10 annual installments of $300,000 plus interest at the rate of 10%. Blair's weighted-average amounts of accumulated building construction expenditures were as follows.
For the period March 1 to December 31,2008 $1,300,000
F
or the period January 1 to September 30,2009 1,900,000
Instructions:
(a) Prepare a schedule that discloses the individual costs making up the balance in the land account in respect ofland site number 101 as of September 30, 2009.
(b) Prepare a schedule that discloses the individual costs that should be capitalized in the office building accountas of September 30, 2009. Show supporting computationsin good form.