Question

Early in 2019, Desert, Co. finalized plans to expand operations. The first stage was completed on January 19th with the purchase of a tract of land to be used as the location for their new office complex. The land and existing building were purchased for $800,000, paying cash. Title search, title insurance, back property taxes and other closing costs totaling $20,000 were paid at closing. During February, the old building was demolished at a cost of $70,000, and an additional $50,000 was paid to clear and grade the land. Salvaged materials from the demolished building were sold for proceeds of $20,000. Construction of the new office complex began on March 1 and was completed on November 30, 2019 Construction expenditures paid to sub-contractors were made as follows: March 1 June 1 $ 900,000 $1,200,000 $1,500,000 $1,800,000 Sept 1 Nov 1 Desert borrowed a $2,000,000, 8%, 2-year note on February 1st to help finance construction. Interest will be paid annually. The company's only other outstanding debt during all of 2019 was a $3,100,000, 9%, 10-year note payable. In December, the company purchased equipment and furniture for a lump-sum price of $550,000. The fair values of the equipment and furniture were $455,000 and $245,000, respectively. Given this information, determine the Original Cost of the Land. 920000

I need help figuring out the last 3 information.

Answer 1

Original cost of Land
Particulars	Amount ($)
Acquisition cost of Land and Building	800,000
Insurance and taxes	20,000
Clearing and grading land	50,000
Demolition cost	50,000
Cost of Land	920,000

Please note that demolition cost can be capitalised in the cost of building as well because demolition cost has been incurred for constructing a new building

Historical cost of Building			30-Nov-19
Date	Particulars	Amount ($)	No of days till 30.09.2019	Interest ($) till 30.09.2019	8% 2 year note utilised	8% 2 year note left	9% 10 year note utilised	9% 10 year note left	weighted-average accumulated expenditures
1-Mar-19	Construction cost of building	900,000	274	54,049	900,000	1,100,000			675,616
1-Jun-19	Construction cost of building	1,100,000	182	43,879	1,100,000	-			548,493
1-Jun-19	Construction cost of building	100,000	182	4,488	-	-	100,000	3,000,000	49,863
1-Sep-19	Construction cost of building	1,500,000	90	33,288			1,500,000	1,500,000	369,863
1-Nov-19	Construction cost of building	1,800,000	29	10,726			1,500,000	-	143,014
	Historical cost of Building	5,400,000		146,430	2,000,000		3,100,000		1,786,849

Interest to be expensed off
Particulars	Amount	Beginning	End	No of days	Interest
8% 2 year note - no construction	2,000,000	1-Feb-19	28-Feb-19	27	11,836
8% 2 year note - unutilised portion	1,100,000	1-Mar-19	31-May-19	91	21,940
9% 10 year note - not utlised for construction	3,100,000	1-Jan-19	31-May-19	150	114,658
9% 10 year note - unutilised portion	3,000,000	1-Jun-19	31-Aug-19	91	67,315
9% 10 year note - unutilised portion	1,500,000	1-Sep-19	31-Oct-19	60	22,192
8% 2 year note - construction completed	2,000,000	1-Dec-19	31-Dec-19	30	13,151
9% 10 year note - construction completed	3,100,000	1-Dec-19	31-Dec-19	30	22,932
Total Interest to be expensed off					274,022

Avoidable Interest

Avoidable Interest = weighted-average accumulated expenditures up to the principal balance of specific borrowing * interest rate on that specific borrowing + weighted-average accumulated expenditures in excess of specific borrowing * weighted-average interest rate.

Type of loan	Amount	Interest rate	Interest
8% 2 year note	2,000,000	8%	142,948
9% 3 year note	450,000	9%	-
Avoidable Interest			142,948