Question

On March 1, 2021, Beldon Corporation purchased land as a factory site for $75,000. An old building on the property was demolished, and construction began on a new building that was completed on December 15, 2021. Costs incurred during this period are listed below:
 

Demolition of old building	$	6,500
Architect’s fees (for new building)		14,000
Legal fees for title investigation of land		3,000
Property taxes on land (for period beginning March 1, 2021)		4,500
Construction costs		650,000
Interest on construction loan		7,500

 
Salvaged materials resulting from the demolition of the old building were sold for $3,500.
 
Required:
Determine the amounts that Beldon should capitalize as the cost of the land and the new building.
  

Answer 1

Answer
Capitalized cost of land:
Purchase Price	$          75,000
Demolition of old building	$            6,500
Legal fees for title investigation	$            3,000
Sale of materials	-$           3,500
Total cost of land	$          81,000
Capitalized cost of building:
Architect's fees	$          14,000
Construction costs	$        650,000
Interest on construction loan	$            7,500
Total cost of building	$        671,500