In: Accounting
On March 1, 2018, Beldon Corporation purchased land as a factory
site for $72,000. 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 | $ | 5,000 | |
Architect’s fees (for new building) | 11,000 | ||
Legal fees for title investigation of land | 8,000 | ||
Property taxes on land (for period beginning March 1, 2018) | 4,200 | ||
Construction costs | 620,000 | ||
Interest on construction loan | 6,000 | ||
Salvaged materials resulting from the demolition of the old
building were sold for $3,200.
Required:
Determine the amounts that Beldon should capitalize as the cost of
the land and the new building.
Determine the amounts that Beldon should capitalize as the cost of the land. (Amounts to be deducted should be indicated with a minus sign.)
|
Determine the amounts that Beldon should capitalize as the cost of the new building.
|
cost of land;
Land $72,000.00
Demolition $ 5,000.00
legal fees $ 8,000.00
salvage materials $ (3200.00)
Cost of Land $ 81,800.00
Cost of new building:
Particulars Amount
construction costs $ 620,000.00
interest on construction loan $ 6,000.00
architect $ 11,000.00
Cost of Building $ 637,000.00
Hence the cost of building and cost of land is $ 637,000.00 $ 81800.00
Property taxes are operating expences they are not capitalized