Martin Buber Co. purchased land as a factory site for $946,000. The process of t

Question

Martin Buber Co. purchased land as a factory site for $946,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months.

The company paid $99,330 to raze the old buildings and sold salvaged lumber and brick for $14,900. Legal fees of $4,375 were paid for title investigation and drawing the purchase contract. Martin Buber paid $5,203 to an engineering firm for a land survey, and $160,820 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $3,548, and a liability insurance premium paid during construction was $2,129. The contractor’s charge for construction was $6,480,100. The company paid the contractor in two installments: $2,838,000 at the end of 3 months and $3,642,100 upon completion. Interest costs of $402,050 were incurred to finance the construction.

Determine the cost of the land and the cost of the building as they should be recorded on the books of Martin Buberk Co. Assume that the land survey was for the building.

cost of land=?

cost of building=?

Explanation / Answer

Facter buildings factory site for 946000 99330 Sold salvaged 14900 946000 84430 Contractor’s charge for construction 0 6480100 Legal fees 3959.276 415.724 engineering firm 5203 160820 Insurance 0 3548 Premium paid during construction 0 4258 Cost of land and bulding 955162.3 6733572

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