At December 31, 2019, certain accounts included in the property, plant, and equipment section of Golden Corporation’s statement of financial position had the following balances:

Land ............................................................ $310,000
Buildings—Structure ................................... 883,000
Leasehold Improvements .......................... 705,000
Equipment ................................................... 845,000

During 2020, the following transactions occurred:

1. Land site No. 621 was acquired for $800,000 plus a fee of $7,000 to the real estate agent for finding the property. Costs of $33,500 were incurred to clear the land. In clearing the land, topsoil and gravel were recovered and sold for $11,000.

2. Land site No. 622, which had a building on it, was acquired for $560,000. The closing statement indicated that the land’s assessed tax value was $309,000 and the building’s value was $102,000. Shortly after acquisition, the building was demolished at a cost of $28,000. A new building was constructed for $340,000 plus the following costs:

Excavation fees .................................................................. $38,000
Architectural design fees .................................................... 15,000
Building permit fee ................................................................ 2,500
“Green roof” design and construction
(to be retrofitted every seven years) ................................. 36,000
Imputed interest on funds used during construction
(share financing) ..................................................................... 8,500

The building, completed and occupied on September 30, 2020, is expected to have a 30-year useful life.

3. A third tract of land (No. 623) was acquired for $265,000 and was put on the market for resale.

4. During December 2020, costs of $89,000 were incurred to improve leased office space. The related lease will terminate on December 31, 2022, and is not expected to be renewed.

5. Equipment was purchased under a royalty agreement. The terms of the agreement require Golden Corporation to pay royalties based on the units of production for the equipment. The equipment’s invoice price was $111,000, freight costs were $3,300, installation costs were $3,600, and royalty payments for 2020 were $15,300.

Instructions

a. Prepare a detailed analysis of the changes in each of the following statement of financial position accounts for 2020: Land, Leasehold Improvements, Buildings Structure, Buildings—Roof, and Equipment. Ignore the related Accumulated Depreciation accounts.

b. List the items in the transactions above that were not used to determine the answer to part (a), and indicate where, or if, these items should be included in Golden’s financial statements.

c. Digging Deeper Using the terminology from the conceptual framework in Chapter 2, explain why the items in part (b) were not included in the accounts Land, Leasehold Improvements, Buildings (the Structure and Roof accounts), and Equipment.