Calculate capitalized cost and depreciation expense.
The executives for Sea World bought a piece of property adjacent to the park with an old, run-down motel. The cost of the land with the old motel was $1,500,000. Real estate com missions and fees including the title search were $317,850. Sea World paid its attorney $15,000 to review the contract and complete the purchase of the land on July 1, 2008 . The resort paid $25,750 for the old motel to be demolished and an additional $17,850 for sugar white sand to be hauled in to prepare the land for use. The company paid $80,000 for some palm trees for the new area. Sea World hired three new employees at a salary of $35,000 a year each to maintain the landscaping for the new area.
Required
a. What amount should be capitalized for this new asset?
b. Would there be any depreciation expense for land at the end of 2008? Explain your answer.