On January 1, 2022, Blair Corporation purchased for $500,000 a tract of land (site number 101) with a building. Blair paid a real estate broker's commission of $36,000, legal fees of $6,000, and title guarantee insurance of $18,000. The closing statement indicated that the land value was $500,000 and the building value was $100,000. Shortly after acquisition, the building was razed at a cost of $54,000.

Blair entered into a $3,000,000 fixed-price contract with Slatkin Builders, Inc. on March 1, 2022, for the construction of an office building on land site number 101. The building was completed and occupied on September 30, 2023. Additional construction costs were incurred as follows.

The building is estimated to have a 40-year life from date of completion and will be depreciated using the 150% declining-balance method.To finance construction costs, Blair borrowed $3,000,000 at a 10% annual interest rate on March 1, 2022. Blair will pay interest only over the life of the loan, with the principal payable at the end of 10 years when the loan matures. Excess funds from the construction loan were invested to earn a return. During 2022, these funds earned interest revenue of $135,000. During 2023, the funds earned interest revenue of $45,000.

Instructions

a. Prepare a schedule that discloses the individual costs making up the balance in the Land account in respect of land site number 101 as of September 30, 2023.

b. Prepare a schedule that discloses the individual costs that should be capitalized in the Buildings account as of September 30, 2023. Show supporting computations in good form.

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Plans, specifications, and blueprints $21,000 Architects' fees for design and supervision 82,000