Early in 2016, Flores Company, Inc. purchased a parcel of land with a building for $500,000. The closing statement indicated the land value was $390,000 and the building value was $130,000. In addition, to acquire the land, Flores Company paid an $18,000 commission to a real estate agent and title insurance of $2,000. Shortly after acquisition, the building was demolished at a cost of $50,000. Flores Company then began using the land as a parking lot.
On February 1, 2016, Flores Company began construction of a new building on land that it has owned since 2011. Architectural plans were formalized on February 1, when the architect was paid $39,000. Excavation work began during the first week in February with payments made to the contractor as follows:
- Date of Payment: March 1, 2016
Amount: $90,000
- Date of Payment: September 1, 2016
Amount: $250,000
- Date of Payment: December 31, 2016
Amount: $150,000
Construction was completed on December 31, 2016, and the building was first occupied on that same day.
Flores Company, Inc. had no new borrowings directly associated with the new building but had the following debt outstanding:
- 10%, 10-year note payable of $1,000,000, dated July 1, 2014, with interest payable annually on July 1.
- 5%, 15-year bond issue of $5,000,000, sold at par on December 31, 2015, with interest payable annually on December 31.
Related to the above, on its December 31, 2016, financial statements, what amounts should Flores report for:
(a) Land
(b) Buildings
(c) Interest payable
(d) Interest expense
Round all computations involving dollars to the nearest whole dollar.
