# Question: In January 2013 ProTech Co pays 1 550 000 for a tract

In January 2013, ProTech Co. pays \$1,550,000 for a tract of land with two buildings. It plans to demolish Building A and build a new shop in its place. Building B will be a company office; it is appraised at \$482,800, with a useful life of 15 years and a \$99,500 salvage value. A lighted parking lot near Building B has improvements (Land Improvements B) valued at \$ 142,000 that are expected to last another five years with no salvage value. Without the buildings and improvements, the tract of land is valued at \$ 795,200. The company also incurs the following additional costs.
Cost to demolish Building A . . . . . . . . . . . . . . . . . . . . . . . . . . . \$ 122,000
Cost of additional land grading . . . . . . . . . . . . . . . . . . . . . . . . . 174,500
Cost to construct new building (Building C), having a
useful life of 20 years and a \$ 258,000 salvage value . . . . . . . . . 1,458,000
Cost of new land improvements (Land Improvements C) near Building
C, having a 10- year useful life and no salvage value . . . . . . . . . . 103,500

Required
1. Prepare a table with the following column headings: Land, Building B, Building C, Land Improvements B, and Land Improvements C. Allocate the costs incurred by ProTech to the appropriate columns and total each column (round percents to the nearest 1%).
2. Prepare a single journal entry to record all incurred costs assuming they are paid in cash on January 1, 2013.
3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2013 when these assets were in use.

Sales14
Views673