Cergo Computers constructed a new training center in 2014, which you have been hired to manage. A review of the accounting records shows the following expenditures debited to an asset account called Training Center:
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Attorney's fee, land acquisition
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$ 34,900
|
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Cost of land
|
598,000
|
|
Architect's fee, building design
|
102,000
|
|
Building
|
1,020,000
|
|
Parking lot and sidewalk
|
135,600
|
|
Electrical wiring, building
|
164,000
|
|
Landscaping
|
55,000
|
|
Cost of surveying land
|
9,200
|
|
Training equipment, tables, and chairs
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136,400
|
|
Installation of training equipment
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68,000
|
|
Cost of grading the land
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14,000
|
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Cost of changes in building to soundproof rooms
|
59,200
|
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Total account balance
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$2,396,300
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During the center's construction, an employee of Cergo worked full-time overseeing the project. He spent two months on the purchase and preparation of the site, six months on the construction, one month on land improvements, and one month on equipment installation and training-room furniture purchase and setup. His salary of $64,000 dur- ing this ten-month period was charged to Administrative Expense. The training center was placed in operation on November 1.
REQUIRED:
1. Prepare a schedule with the following four column (account) headings: Land, Land Improvements, Building, and Equipment. Place each of the above expenditures in the appropriate column. Total the columns.
2. Concept- What impact does the classification of the items among several accounts have on evaluating the profitability performance of the company?