On January 3, 2013, Michelson % Sons acquired a tract of land just outside the c

Question

On January 3, 2013, Michelson % Sons acquired a tract of land just outside the city The land and existing building were purchased for $2.4 million. Michelson paid $400,000 and signed a noninterest-bearing note requiring the company to pay the remaining $2,000,000 on December 31, 2014. An interest rate of 7% properly reflects the time value of money for this type of loan agreement. Transfer taxes, title insurance, and other costs totaling $24,000 were paid at closing. During February, the old building was demolished at a cost of $120,000, and an additional $100,000 was paid to clear and grade the land, Construction of a new building began on March 1 and was completed on October 30. Construction expenditure were as follows: Michelson did not borrow specifically for the construction project, but did have the following debt outstanding throughout 2013: In December, the company purchased equipment and office furniture and fixtures for a lump-sum price of $800,000 The fair values of the equipment and the furniture and fixtures were $540,000 and $360,000, respectively. In December. Michelson paid $340,000 for the construction of parking lots and landscaping. Determine the initial values of the various assets that Michelson acquired or constructed during 20 Cost of LandCost of Land Improvement(s) - Excluding Building Cost of Building Separate cost to be recorded for Equipment and Furniture & Fixtures Interest Expense to be reported on the company's 2013 income statement

Explanation / Answer

On January 3, 2013, Michelson % Sons acquired a tract of land just outside the c

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