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Sherman Inc. uses the calendar year as its reporting period. During Year 1, the company completed numerous property, plant and equipment transactions. In particular, Sherman incurred long-term debt to build a new warehouse storage facility at its current location. An unrelated building contractor managed the new warehouse construction project. Sherman has a policy of capitalizing expenditures with a unit cost of at least $1,000 and a useful life greater than one year. The company prorates depreciation expense in the year of acquisition based on the date of purchase. Use the spreadsheet below to calculate the amount the company should capitalize for each of the listed property, plant and equipment assets, which were purchased or constructed by Sherman during Year 1. Enter your answer in the appropriate shaded cells below. Note: To use a formula in the spreadsheet, it must be preceded by an equal sign (e.g., =B1+B2). Any negative numbers should be entered with a leading minus (-) sign.

Land for the new warehouse Purchase price Demolition of the existing structures on property 4 Proceeds from the sale of scrap from the old buildings on the site 5 Costs incurred to grade and pave the driveways and parking lots 6 Lawn and garden sprinkler systems for the property Legal fees incurred to purchase the property and paid at settlement 8 Capitalized cost of the land 10 Construction of new warehouse Construction began March 15 and ended August 31 12 Borrowings to finance the construction 13 Interest incurred from 3/15 through 831 14 Interest incurred from 9/1 through 12/31 15 Total cost of labor, materials, and overhead to construct the warehouse 16 Costs incurred to grade and pave the driveways and parking lots Costs to repair the water line ruptured during excavation 18 Capitalized cost of the warehouse 20 New machine Cost of the machine 21 Sales tax paid on the machine 23 Installation costs 24 Finance charges on purchase loan 25 Capitalized cost of the new machine $325,000 $120,000 $65,000 $40,000 $18,500 $24,000 $265,000 $11,000 $8,500 $305,000 $40,000 $8,000 $36,000 $2,100 $3,700 $2,900

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