Global company was formed on January 1, 2010, and began constructing a new plant. At the end of 2010, its auditor discovered that all expenditures involving long-term assets had been debited to an account called Fixed Assets. And analysis of the Fixed Assets account, which had a year-end balance of $2,659,732, disclosed that it contained the following items:

Cost of land .............. 320,600

Surveying costs ............... 4,100

Transfer of title and other fees required by

the country ................ 920

Broker’s fees for land ........... 21,144

Attorney’s fees associated with land acquisition . 7,048

Cost of removing timber from land ...... 49,600

Cost of grading land ............. 4,200

Cost of digging building foundation ...... 35,100

Architect’s fee for building and land improvements

(80 percent building) ........... 67,200

Cost of building construction ......... 715,000

Cost of sidewalks .............. 11,400

Cost of parking lots ............ 54,400

Cost of lighting for grounds ......... 80,300

Cost of landscaping ............ 11,800

Cost of machinery ............. 993,000

Shipping cost on machinery ......... 55,300

Cost of installing machinery ......... 176,200

Cost of testing machinery .......... 21,600

Cost of changes in building to comply with safety

regulations pertaining to machinery ...... 12,540

Cost of repairing building that was damaged in the

installation of machinery .......... 8,900

Cost of medical bill for injury received by

employee while installing machinery ..... 2,560

Cost of water damage to building during heavy

rains prior to opening the plants for operation . 6,820

Account balance ............. $2,659,732

Global Company sold the timber it cleared from the land to a firewood dealer for $7,000. This mount was credited to Miscellaneous income.

During the construction period, two of Global’s Supervisors devoted full time to the construction project. Their annual salaries were $51,000 and $39,000, respectively. They spent two month on the purchase and preparation of the land, six months on the construction of the building (approximately one-sixth of which was devoted to improvements on the grounds), and one month on machinery installation. When the plant began operation on October 1, the supervisors returned to their regular duties. Their salaries were debited to factory Salaries Expense.

Required

1. Prepare a schedule with the following column heading: Land, Land Improvement, building, Machinery, and Expense. Place each of the above expenditures in the appropriate column. Negative amounts should be shown in parentheses. Total the columns.

2. What impact does the classification of the items among several accounts have on evaluating the profitability performance of the company?