On March 1, 2018, Beldon Corporation purchased land as a factory site for $72,00

Question

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:

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.

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

Explanation / Answer

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

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