On January 1, 2014 Licentious Company reported the following property, plant and

equipment:
Land
Building
Leasehold
improvements

1,500,000
4,000,000
500,000

The following transactions occurred during the current year:

1. Land site number 6221 was acquired for 3,000,000.
Additionally, to acquire the land the entity paid a 60,000 commission to a real
estate agent.
Cost of 15,000 was incurred to clear the land for the intended use but not to
make room for the construction of a new building. During the course of
clearing the land, timber and gravel were recovered and sold for 5,000.
2. A second tract of land site number 622 with a building was acquired for
4,000,000.
The closing statement indicated that the land fair value was 2,500,000 and
the building fair value was 1,500,000.
Shortly after acquisition, the building was demolished at a cost of 300,000 to
make room for the construction of new building.
3. A new building was constructed for 5,000,000 plus the following costs:
Excavation fee
Architectural design fee
Building permit
Imputed interest on funds used during construction

50,000
150,000
40,000
500,000

4. A third tract of land site number 623 was acquired for 2,000,000 and was
classified as held for sale.
5. Extensive work was done to a building occupied by the entity under a lease
agreement that expires on December 31, 2021.
The total cost of the work was 1,250,000 which consisted of the following:
Panting of ceiling
Electrical work with useful life of 10 years
Construction of extension to current working
Area with useful life of 15 years

100,000
350,000
800,000

The lessor paid one-half of the cost incurred in connection with the extension
to the current working area.
6. During December 2014, cost of 650,000 was incurred to improve leased
office space.
The related lease will terminate on December 31, 2016 and is not expected to
be renewed.

REQUIRED:
Prepare an analysis of the changes in each of the following accounts:
a. Land, as part of property, plant and equipment
b. Building
c. Leasehold improvements
January 1 balance
Landsite number 621
Acquisition Cost
Commission paid for real estate
Clearing Land
Less: Amount Recovered

1,500,000
3,000,000
60,000
15,000
5000

10,000
4,570,000

Landsite number 622

Land Value
Building Value
Demolition Cost

2,500,000
1,500,000
300,000

December 31 balance

4,300,000
8,870,000

January 1 balance
Cost of new building constructed
Excavation fee
Architectural design fee
Buildind permit
Construction Costs

4,000,000
5,000,000
50,000
150,000
40,000
500,000

December 31 balance

9,740,000

January 1 balance
Office space

500,000
650,000

December 31 balance

1,150,000