On February1, 2017, Nelson Corporation purchased a parcel of land as a factory s

Question

On February1, 2017, Nelson Corporation purchased a parcel of land as a factory site for $320,000 . An old building on the property was demolished, and constraction began on the new building which was completed on November 1, 2017. Cost incurred during this period are listed below: Demolition of old building- $20,000; Architect's fees-$35,000; Legal fees for title investigation and purchase contract -$5,000; Construction costs-$1,390,000; Salvages material resulting from demolition were sold for $10,000. Nelson should record the cost of the land and new buildings respectively,as ???

Explanation / Answer

Cost of Land: Purchase cost of Land 320,000 Demolition cost of land 20,000 Legal fess of title investigation 5,000 Less: Salvage value of material -10,000 Cost of Land: 335,000 Cost of Building: Contruction cost 1,390,000 Architects fees 35,000 Cost of Building: 1,425,000

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