1 On July 1 2018 Ingalls Impending Disaster Inc purchased la

1 On July 1, 2018, Ingalls Impending Disaster Inc. purchased land and a factory building at a total cost of $9,200,000 Prior to the purchase, the land and factory building were appraised at values of $500,000 and $9,500,000, respectively During July, Ingalls Impending Disaster Inc. began construction on a warehouse on the land adjacent to the factory building. The company completed the new warehouse in November 2018 and incurred the following costs related to its construction Cost to remove debris from construction area Proceeds from scrap of debris material Cost to level and grade land in construction area Architect and design fees Construction materials and labor used Avoidable interest during construction period Actual interest during construction period $12,000 2,500 19,600 8,400 575,000 9,800 8,100 Ingalls Impending Disaster Inc. also incurred $36,750 of costs during 2018 to construct new sidewalks, parking lots and roadways on the property Determine the historic costs of the land, factory building, warehouse, and land improvements recognized by Ingalls Impending Disaster Inc. during 2018. (16 peints) Land Factory Building Werehouse SUPPORTING CALCULATIONS

Solution

Based on appraised value:

Cost attributed to land=500000/(500000+9500000)=0.05

Cost attributed to Factory building =9500000/(500000+95000000=0.95

Total cost=9200000

Cost of Land=0.05*9200000=$460,000

Cost of Factory Building=0.95*9200000=$8,740,000

	Based on appraised value: Cost attributed to land=500000/(500000+9500000)=0.05 Cost attributed to Factory building =9500000/(500000+95000000=0.95 Total cost=9200000 Cost of Land=0.05*9200000=$460,000 Cost of Factory Building=0.95*9200000=$8,740,000
	Historic cost of land:
	Purchase cost attributed to land	$460,000
	Cost to remove debris in construction area	$12,000
	Cost to level and grade land	$19,600
	Total cost of land	$491,600
	Cost of Factory Building	$8,740,000
	Cost of warehouse
	Architect and design fees	$8,400
	Construction material and labor used	$575,000
	Actual interest during construction period	$8,100
	Total cost of Warehouse	$591,500
	Cost of Land Improvement:
	Sidewalks, patking lots and roadways	$36,750
	Land	$491,600
	Landimprovement	$36,750
	Factory Building	$8,740,000
	Warehouse	$591,500