Landon Co purchased a 500000 tract of land that is intended

Landon Co. purchased a $500,000 tract of land that is intended to be the site of a new office complex. Landon incurred additional costs and realized salvage proceeds as follows:

What would be the capitalized cost of the land?

Demolition of existing building on site	$75,000
Legal and other fees to close escrow	15,000
Proceeds from sale of demolition scrap	10,000

Solution

Purchase price $500,000 Demolition cost $75,000 Legal fees $15,000 Sale of scrap ($10,000) Total cost of land $580,000