P$8-4.$ PPE capitalization $($L$.$O$.8-1)($Difficult $25$ minutes$)$

Joliet Co$.$ Ltd$.$ was incorporated on January $2,2023,$ but was unable to begin manufacturing immediately. The new factory facilities became available for use on July $1,2023.$

During the start$-$up period, the company provisionally used a $$Land and factory building$$ account to record the following transactions, in chronological order:

Jan. $31$

Purchase of land and building

$$220,000$

Feb. $19$

Cost of removing existing building

$9,000$

Mar. $15$

Proceeds on sale of scrap material from demolition

$(3,000)$

Mar. $15$

Partial payment on new construction

$50,000$

Mar. $15$

Legal fees paid $($see note i below$)$

$3,500$

Apr. $1$

Second payment on new construction

$50,000$

Jun. $3$

Insurance premium $($see note ii$)$

$2,700$

Jun. $20$

Special tax assessment $($see note iii$)$

$5,500$

Jun. $30$

General expenses $($see note iv$)$

$24,400$

Jul. $3$

Final payment on new construction

$70,000$

Dec. $31$

Asset write$-$up $($see note v$)$

$23,500$

Subtotal

$455,600$

Dec. $31$

Less depreciation for $2023($see note vi$)$

$(18,224)$

Account balance

$$437,376$

Notes

Legal fees of $$3,500$ covered the following:

Cost of incorporating the company

$$700$

Examination of title covering purchase of land

$1,300$

Legal work in connection with construction contract

$1,500$

Insurance covered the building for a one$-$year term beginning April $1,2023.$

The special tax assessment covered repaving the street in front of the building.

General expenses covered the following for the period from January $2,2023,$ to June $30,2023$:

President$$s salary

$$20,000$

Plant superintendent covering supervision of new building

$4,400$

The board of directors increased the value of the building by $$23,500,$ believing that such an increase was justified to reflect the current market at the time the building was completed; however, there was no external validation of this higher value. Retained earnings were credited for this amount.

Engineers estimate the useful life of the building to be $40$ years. The company believes that the declining$-$balance method at a $5\%$ rate is appropriate. The company$$s policy for new PPE is to depreciate the assets according to the time available for use in the fiscal year, rounded to the closest month.

Required:

Prepare entries to reflect correct land, factory building, and accumulated depreciation accounts at December $31,2023.$