McMillan Tire Inc operates in several provinces The head

office #6677
McMillan Tire Inc. operates in several provinces. The head office incurred the following costs in
acquiring land and a building, making land improvements, and constructing and furnishing a
garage showroom:a. Purchase price of land, including a building that will be enlarged to be a
warehouse (land fair value is $150,000; building fair value is $50,000) ................. ................
$180,000b. Fence around the land .....................................................................................
26,000c. Company signs near front and rear approaches to the company property .......
25,000d. Title insurance on the land acquisition ............................................................. 1,200e.
Renovation of the warehouse ........................................................................... 21,300f.
Landscaping (additional dirt and earth moving) ............................................... 3,550g. Architect
fee for the design of the garage/showroom ....................................... 45,000h. Building permit for
the building ........................................................................ 200i. Delinquent real estate taxes on
the land to be paid by McMillan ........................ 3,700j. Concrete, wood, and other materials
used in the construction of thegarage/showroom
................................................................................................... 322,000k. Supervisory salary of
construction supervisor (90% to garage/showroom,6% to land improvements, and 4% to
building renovation) .................................... 55,000l. Landscaping (trees and shrubs)
............................................................................. 5,350m. Masonry, carpentry, roofing, and
other labour to constructthe garage/showroom
................................................................................................. 234,000n. Lights for the parking
lot, walkways, and company signs .................................. 8,900o. Parking lots and concrete
walks on the property ................................................ 17,450p. Interest cost on construction loan
for garage/showroom .................................... 3,300q. Installation of equipment
..................................................................................... 8,000r. Equipment for the
garage/showroom ...................................................................... 80,000McMillan Tire depreciates
buildings over 40 years, land improvements over 10 years, and equipment over 8 years, all on a
straight-line basis with zero residual value.Requirements1. Determine the total cost of each
asset. Set up columns for Land, Land Improvements, Garage/Showroom, Warehouse, and
Equipment. Decide how to account for each of McMillan's costs by listing the cost under the
correct account.2. All construction was complete and the assets were placed in service on
March 29. Record depreciation for the year ended December 31. Round figures to the nearest
dollar.3. Identify the issues of this problem, and discuss how your decisions would affect the
results of McMillan Tire Inc.View Solution:
McMillan Tire Inc operates in several provinces The head office

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