JoJo’s, Inc. is opening a new fast-food location on the outskirts of town. The company policy is to depreciate land improvements over 20 years, buildings over 40 years, and all furniture and equipment over 8 years, all on a straight-line basis using a mid-month convention with no residual value.
Determine the total cost of each asset.
All construction was completed on October 31. Prepare the year-end journal entry to record depreciation expense assuming no depreciation has been recorded yet.
Purchase price of three acres of land
Delinquent real estate taxes on the land to be paid by JoJo’s, Inc.
Additional dirt and earthmoving
Title insurance on the land acquisition
Fence around the boundary of the property
Building permit for the building
Architect’s fee for the design of the building
Signs near the front of the property
Materials used to construct the building
Labor to construct the building
Interest cost on construction loan for the building
Parking lots on the property
Lights for the parking lots
Salary of construction supervisor (80% to building; 20% to parking lot and concrete walks)
Furniture and equipment
Transportation of furniture and equipment from seller to the building