On Jan 1, 2017, Brian Corporation purchased a parcel of land as a factory site f

Question

On Jan 1, 2017, Brian Corporation purchased a parcel of land as a factory site for $300,000. An old building on the property was demolished, and construction began on a new building which will be completed Nov. 2017. Cost incurred during the period are listed below:

Demolition of old building $40,000

Architect's fees $12,000

Legal fees for title investigaton and purchse contract $1,000

(Salvage materials resulting from demolition were sold for $15,000)

Brian should record the cost of the land and new building respectively, as

A. $326,000 and $1,242,000

B. $300,000 and $1,282,000

C.$312,000 and $1,230,000

D. $260,000 and $1,270,000

Explanation / Answer

Solution:

Land: 300000 + 40000 + 1000 -15000 = 326000

Building: 12000 + (Construction cost is missing) = 1242000

It's a multiple choice question. As we found the land record, we can go for Ans(A) : $326,000 and $1,242,000

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