Digital Warehousing incurred the following costs in acquiring land and a building, making land improvements, and constructing and furnishing an office building for its own use:

Digital Warehousing amortizes buildings over 40 years, land improvements over 20 years, and furniture over 6 years, all on a straight-line basis with zero residual value.

Required

1. Set up columns (or T-accounts) for Land, Land Improvements, Office Building, Storage Building, and Furniture. Show how to account for each of Digital’s costs by listing the cost under the correct account. Determine the total cost of each asset.

2. Assuming that all construction was complete and the assets were placed in service on February 25, record amortization for the year ended December 31. Round figures to the nearest dollar.

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a. b. C. d. e. Purchase price of two hectares of land, including an old building that will be used for storage of maintenance equipment (land appraised market value is $1,300,000; building appraised market value is $300,000) Real estate taxes in arrears on the land to be paid by Digital Warehousing Additional dirt and earth moving Legal fees on the land acquisition Fence around the boundary of the land $1,150,000 6,000 6,000 4,500 70,000