Question

Chapter 11 wepreciation Depreciation m oglimento poinment, and Disposol and ding for sive on Bröding's valce insuradditional 2019. Brock Corporation purchased a tracto of 536,0Value was,000,019, for the conock enterede was Sicc of $18, Boock paid a real estate broker's comd that the lat a cost March occupied orporation purchased a tract Comprehensive On January 2, 2019, Brock building for S600,000. Additionally, Brock paida and title guarantee insurance of Buarantee insurance of si8.000. The closing ilding's value was $100,000. Shortly after acqu Brock entered into a $3,000,000 fixed price the construction of an office building on land site September 30, 2020. Additional construction co Plans, specifications, and blueprints Architects' fees for design and supervision The company estimates that the building will have a the 150%-declining-balance depreciation method. To finance the construction cost. Brock borrowed nnual installments of $300,000 plus interest at the closing statement indicate he buildinett Builde was.com er 30, 2020. Adice building on land site number 10 of an office 100,000 fixed price contract with Bare building as follows went indicated that the land's value was m, the building was razed at a costo tract of land (site number 101) commission of $36.000 legal fees of S6,000, land's value was $500,000 and razed at a cost of $75,000. 5, Inc., on March 2, 2019, for ing was completed and occupied on ntract with Barnett Builders, Inc., e number 101. The building was in costs were incurred as follows: $12,000 95,000 Vill have a 40-year life from the ife from the date of completion and decides to use 0,000 on March 2, 2019. The loan is payable in ayable in 10 · Brock's weighted average accumulated expendi- st at the rate of 14%. Brock's were Puilding were as follows: $ 900,000 2,300,000 ires related to the construction of the building were as er the period March 2 to December 31, 2019 r the period January 1 to September 30, 2020 equired: Prepare a schedule that discloses the individual costs mi to land site number 101 as of September 30, 2020. Prepare a schedule that discloses the individual costs that the account as of September 30, 2020. Show supporting co Prepare a schedule showing the depreciation expense comp December 31, 2020. costs making up the balance in the Land account with supporting computations in good form. at the company should capitalize in the Office Building sense computation of the office building for the year ended

Answer 1

1) Particulars Purchase price of site Broker's comission Legal fees Insurance expense Cost ofrazingbuilding Total Amount($) 600000 36000 6000 18000 75000 735000 2) Particulars Contract price Plans and blueprints Architect's fees Interest expense for 2019 Interest expense for 2020 Total Amount($) 3000000 12000 95000 | 350000 283500 3740500

Interest expense for 2019 Interest expense = Amount of loan outstanding*rate of interest/100 * Months outstanding/12 =$3000000*14/100 *10/12 = $350000 Interest expense for 2020 Interest expense = Amount of loan outstanding*rate of interest/100 * Months outstanding/12 = $2700000*14/100 *9/12 = $283500

Amount of depreciation = cost of building * rate of depreciation/100 * No. of months of use/12 = $3740500*3.75/100 *3/12 = $35067 Working: Rate of depreciation = ($3740500-0/40 / 3740500 *100)*150 = 3.75%