Joliet Co Ltd was incorporated on January 2 2012 but

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Joliet Co. Ltd. was incorporated on January' 2, 2012, but was unable to begin manufacturing
immediately. The new factory facilities became available for use on July 1, 2012.During the start-
up period, the company provisionally used a “Land and Factory Building” account to record the
following transactions, in chronological order:Notes:i. Legal fees of $3,500 covered the
following:Cost of incorporating the company …………………………… $ 700Examination of title covering
purchase of land ……………… 1,300Legal work in connection with construction contract ………… 1,500
Insurance covered the building for a one-year term beginning April 1, 2012.iii. The special tax
assessment covered repaving the street in front of the building.iv. General expenses covered
the following for the period January 2, 2012 to June 30, 2012.President’s salary
…………………………………………………….. $20,000Plant superintendent covering supervision of new
………… 4,400v. The board of directors increased the value of the building by $23,500, believing
that such an increase was justified to reflect the current market at the time the building was
completed; however, there was no external validation of this higher value. Retained earnings
were credited for this amount.vi. Engineers estimate the useful life of the building to be 40
years. The company believes that the declining balance method at a 5% rate is appropriate.
The company’s policy for new PPE is to depreciate the assets according to the time available
for use in the fiscal year, rounded to the closest month.Required:Prepare entries to reflect
correct land, factory building, and accumulated depreciation accounts at December 31,
2012.View Solution:
Joliet Co Ltd was incorporated on January 2 2012 but

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