Comprehensive
At January 1, certain accounts included in the property, plant, and equipment section of Townsand Company's balance sheet had the following
balances:
Land
Buildings
Leasehold improvements
Machinery and equipment
$100,000
800,000
500,000
700,000
During the year, the following transactions occurred:
1. Land site number 621 was acquired for $1,000,000. Additionally, to acquire the land, Townsand paid a $60,000 commission to a real estate
agent. Costs of $15,000 were incurred to clear the land. During the course of clearing the land, timber and gravel were recovered and sold for
$5,000.
2. A second tract of land (site number 622) with a building was acquired for $300,000. The closing statement indicated that the land value was
$200,000 and the building value was $100,000. Shortly after acquisition, the building was demolished at a cost of $30,000. A new building
was constructed for $150,000 plus the following costs:
$11,000
4
8,000
1,000
Excavation fees
Architectural design fees
Building permit fee
The building was completed and occupied on September 29.
3. A third tract of land (site number 623) was acquired for $600,000 and was put on the market for resale.
4. Extensive work was done to a building occupied by Townsand under a lease agreement that expires in 10 years. The total cost of the work was
$125,000, which consisted of the following: