On March 1 2018 Beldon Corporation purchased land as a facto

On March 1, 2018, Beldon Corporation purchased land as a factory site for $60,000. An old building on the property was demolished, and construction began on a new building that was completed on December 15, 2018. Costs incurred during this period are listed below: Demolition of old building Architect\'s fees (for new building) Legal fees for title investigation of land Property taxes on land (for period beginning March 1, 2018) Construction costs Interest on construction loan $4,000 12,000 2,000 3,000 500,000 5,000 Salvaged materials resulting from the demolition of the old building were sold for $2,000 Required: Determine the amounts that Beldon should capitalize as the cost of the land and the new building.

Solution

Land

Building

Therefore,

Cost of Land = $64,000

Cost of Building = $517,000

Also please note that property tax is the regular expenses and not capitalized.

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Land Purchase Price	$        60,000
Demolition of Old Building	$          4,000
Legal Fees	$          2,000
Salvage Material	$        (2,000)
Cost of Land	$        64,000