Reference no: EM131118199
1. Interest during Construction Grieg Landscaping began construction of a new plant on December 1, 2010. On this date the company purchased a parcel of land for $139,000 in cash. In addition, it paid $2,000 in surveying costs and $4,000 for a title insurance policy. An old dwelling on the premises was demolished at a cost of $3,000, with $1,000 being received from the sale of materials. Architectural plans were also formalized on December 1, 2010, when the architect was paid $30,000. The necessary building permits costing $3,000 were obtained from the city and paid for on December 1 as well. The excavation work began during the first week in December with payments made to the contractor as follows.
Date of Payment Amount of Payment
March 1 $240,000
May 1 330,000
July 1 60,000
The building was completed on July 1, 2011. To finance construction of this plant, Grieg borrowed $600,000 from the bank on December 1, 2010. Grieg had no other borrowings. The $600,000 was a 10-year loan bearing interest at 8%.Compute the balance in each of the following accounts at December 31, 2010, and December 31, 2011. (Round amounts to the nearest dollar)
(a) Land.
(b) Buildings.
(c) Interest Expense.
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