On March 1, 2016, Beldon Corporation purchased land as a factory site for $60,00

Question

On March 1, 2016, 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, 2016. 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, 2016) 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: 1-a. Determine the amounts that Beldon should capitalize as the cost of the land. (Amounts to be deducted should be indicated with a minus sign.) Capitalized cost of land: Total cost of land

Explanation / Answer

1-a.Capitalized cost of land:

Particulars Amount

Land $ 60,000

Demolition $ 4,000

Legal fees $ 2,000

Salvage materials - $ 2,000

Total Cost of Land   $ 64,000

1-b. Capitalized Cost of building:

Particulars                                                Amount

Construction costs $ 500,000

Interest on construction loan $ 5,000

Architect $ 12,000

Total Cost of Building $ 517,000

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