Question

Part II (01m Section A: Cost of Land and Building y purchased land as a factory site for $900,000. Rams Company paid $80,000 to wo buildings on the land. Salvage was sold for $5,400. Legal fees of $3,500 were title investigation and making the purchase. Architect's fees were $31,200. Title e cost $2,400, and liability insurance during construction cost $2,600. Excavation cost S10 500. The contractor was paid $2,000,000. Interest costs capitalized during construction were $17,000. 1. The cost of the land that should be recorded by the Rams Company is A. $986,480. C. $980,500. B. $985,900. D. $972,600. 2. The cost of the building that should be recorded by the Rams Company is A. $2,061,300. C. $2,138,300. B. $2,063,700. D. $2,143,700.

Answer 1

a)
Particulars	Land
Purchase price	$    900,000.00
Tearing down cost	$      80,000.00
Salvage Value	$      (5,400.00)
Legal fees	$        3,500.00
Title insurance cost	$        2,400.00
Cost  of land	$    980,500.00	Option C
b)
Particulars	Building
Architect's fees	$      31,200.00
liability insurance	$        2,600.00
Excavation cost	$      10,500.00
Payment for contractors	$ 2,000,000.00
Interest capitalized	$      17,000.00
Cost  of building	$ 2,061,300.00	Option A