Compact Construction Company (CCC) started the construction of twin office tower

Question

Compact Construction Company (CCC) started the construction of twin office towers in20x0 and finished on January 31, 20x1. It incurred the following costs:Land $100,000Farmhouse on the land 20,000Cost of demolishing farmhouse 1,100Cost of leveling the land 3,000Cost of digging to lay the foundation 25,000Cost of building both towers 700,000Landscaping 10,000Insurance during construction 2,500Cost of paving parking lot 20,000Cost of party for workers whenbuildings were completed 1,200Commission to agent to rent Tower A 3,000Cost of special ceiling in Tower Ato accommodate new tenant 2,000Cost of CCC move to Tower B 3,300Cost to reconstruct a wall accidentallydestroyed by a truck during construction 2,700CCC received $1,800 from the sale of materials obtained from demolishing the farmhouse.CCC leased Tower A to a computer company on March 1, 20x1. On June 1, 20x1, CCCmoved into Tower B after deciding to locate its new offices there. On October 1, 20x1,because it was not able to use all of Tower B, CCC moved to a smaller location anddecided to lease Tower B. As of December 31, 20x1, no tenant had been found.CCC uses the straight-line method to depreciate its buildings. These towers have anestimated life of 50 years and no salvage value. The parking lot has an estimated life of 5 years

Calculate the cost of the fixed assets to be shown on the balance sheet

Explanation / Answer

1. Cost of Land = Land $100,000 + Farmhouse on the land 20,000 = 120,000
This is the scene when Land was purchased with intent to constrcut the towers.

Amt received $1,800 from the sale of materials obtained from demolishing the farmhouse wil be credited to Land account. So Land acct = 120,000-1800 = 118,200

2. Cost of Tower will include : Cost of demolishing farmhouse 1,100 + Cost of leveling the land 3,000 + Cost of digging to lay the foundation 25,000 + Cost of building both towers 700,000 + Landscaping 10,000 + Insurance during construction 2,500
SO Building account = 741,600

So cost o fixed asssets in Balance sheet will be as below :
PPE :
Land 118,200
Buildings 741600

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