Lawson Furniture purchased land, paying $65,000 cash and signing a $250,000 note payable. In addition, Lawson paid delinquent property tax of $5,000, title insurance costing $4,000, and $9,000 to level the land and remove an unwanted building. The company then constructed an office building at a cost of $400,000. It also paid $54,000 for a fence around the property, $12,000 for a sign near the entrance, and $8,000 for special lighting of the grounds. Requirements 1. Determine the cost of the land, land improvements, and building. 2. Which of these assets will Lawson depreciate?

(a) Cost of the land= $333,000

(b) Cost of land improvement= $74,000

(c) Construction cost of new building = $400,000

(2) Building and land improvement assets

Explanation:

Lawson furniture carried out the following transactions when they were about to open up a new office

Cash used to purchase land= $65,000

Note payable= $250,000

Property tax= $5,000

Title insurance= $4,000

Amount used to level the land= $9,000

Amount used to construct the new office building= $400,000

Cost of fence= $54,000

Cost of the sign near the entrance= $12,000

Special lighting cost= $8,000

(a) The cost of the land can be calculated by adding up the following

Notes payable+Cash paid+Title insurance+Property tax+ Amount used to level the land

$250,000+$65,000+$4,000+$5,000+$9,000

= $333,000

Cost of the land= $333,000

(b) The cost of land improvement can be calculated by adding the following

Special lighting+ Fence cost+ Cost of sign entrance

$8,000+ $54,000+$12,000

= $74,000

The cost of the land improvement is $74,000

(c) The amount used for the construction of the new office building is $400,000

(2) Lawson will depreciate the building and land improvement assets because they tend to lose their value over a period of time.

answer; balance sheets;

answer; sensory adaptation;