Windsor Company was incorporated on January 2, 2018, but wasunable to begin manufacturing activities until July 1, 2018,because new factory facilities were not completed until thatdate.
The Land and Buildings account reported the following itemsduring 2018.
January 31 Land and building $165,900
February 28 Cost of removal of building 9,973
May 1 Partial payment of new construction 63,430
May 1 Legal fees paid 4,630
June 1 Second payment on new construction 48,600
June 1 Insurance premium 2,280
June 1 Special tax assessment 4,310
June 30 General expenses 36,249
July 1 Final payment on new construction 30,570
December 31 Asset write-up 56,497
Total 422,439
December 31 Depreciation-2018 at 1% (3,613 )
December 31, 2018 Account balance $418,826
The following additional information is to be considered.
1. To acquire land and building, the company paid $85,900 cashand 800 shares of its 8% cumulative preferred stock, par value $100per share. Fair value of the stock is $106 per share.
2. Cost of removal of old buildings amounted to $9,973, and thedemolition company retained all materials of the building. 3. Legalfees covered the following.
Cost of organization $710
Examination of title covering purchase of land 1,450
Legal work in connection with construction contract 2,470
Total $4,630
4. Insurance premium covered the building for a 2-year termbeginning May 1, 2018.
5. The special tax assessment covered street improvements thatare permanent in nature.
6. General expenses covered the following for the period fromJanuary 2, 2018, to June 30, 2018.
President’s salary $32,162
Plant superintendent’s salary-supervision of new building 4,087$36,249
7. Because of a general increase in construction costs afterentering into the building contract, the board of directorsincreased the value of the building $56,497, believing that such anincrease was justified to reflect the current market at the timethe building was completed. Retained earnings was credited for thisamount.
8. Estimated life of building-50 years. Depreciation for 2018-1%of asset value (1% of $361,300, or $3,613).
