Drive and Fly, an airport parking service, incurred thefollowing costs to acquire land, buildings, and other expendituresto start the business. Here are the various expendituresincurred.
Expenditures Amount Land price $80,000
Previous delinquent taxes paid at closing by Drive and Fly$5,600
Earthmoving $9,000
Title insurance $3,200
Fence around boundary $9,100
Building permit for a new building $500
Architectâs fee for a new building $20,700
Signage in front of the property $9,000
Building cost (labor and materials) $375,000
Construction loan interest cost $9,500
Parking lot construction costs $29,000
Lights for parking lots $11,300
Construction supervisor salary (80% to building, 20% to landimprovements) $80,000
Furniture $11,600
Freight costs for furniture FOB shipping point $2,200
Landscaping $6,300
Tow truck $25,000
Three buses to shuttle to/from the airport $90,000
Computer system $12,000
Land has an unlimited lifespan; a building has a 40-yearlifespan; land improvements have a 20-year lifespan; furniture hasa 10-year lifespan; the tow truck has a 5-year lifespan; a computersystem has a 5- year lifespan with 40% of derived revenue in yearone, 25% in Year 2, 15% in Year 3, and 10% for remaining years; andfinally, the shuttle buses have an 8-year, or 50,000 travelhours.
Calculate the depreciable cost for the land, land improvements,building, furniture, truck, buses, and the computer.
Pay particular attention to the facts of the scenario, whichwould affect depreciation and amortization decisions. Determine thebest methods to use, based on your analysis of the scenario.
Submission Requirements:
Submit the completed assessment as a Word attachment.
ï· Font: Arial, 12 point
ï· Line spacing: Double
ï· Use the APA citation format.
Drive and Fly, an airport parking service, incurred thefollowing costs to acquire land, buildings, and other expendituresto start the business. Here are the various expendituresincurred.
Expenditures Amount Land price $80,000
Previous delinquent taxes paid at closing by Drive and Fly$5,600
Earthmoving $9,000
Title insurance $3,200
Fence around boundary $9,100
Building permit for a new building $500
Architectâs fee for a new building $20,700
Signage in front of the property $9,000
Building cost (labor and materials) $375,000
Construction loan interest cost $9,500
Parking lot construction costs $29,000
Lights for parking lots $11,300
Construction supervisor salary (80% to building, 20% to landimprovements) $80,000
Furniture $11,600
Freight costs for furniture FOB shipping point $2,200
Landscaping $6,300
Tow truck $25,000
Three buses to shuttle to/from the airport $90,000
Computer system $12,000
Land has an unlimited lifespan; a building has a 40-yearlifespan; land improvements have a 20-year lifespan; furniture hasa 10-year lifespan; the tow truck has a 5-year lifespan; a computersystem has a 5- year lifespan with 40% of derived revenue in yearone, 25% in Year 2, 15% in Year 3, and 10% for remaining years; andfinally, the shuttle buses have an 8-year, or 50,000 travelhours.
Calculate the depreciable cost for the land, land improvements,building, furniture, truck, buses, and the computer.
Pay particular attention to the facts of the scenario, whichwould affect depreciation and amortization decisions. Determine thebest methods to use, based on your analysis of the scenario.
Submission Requirements:
Submit the completed assessment as a Word attachment.
ï· Font: Arial, 12 point
ï· Line spacing: Double
ï· Use the APA citation format.
