Question

Shamrock Co. purchased land as a factory site for $432,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months. The company paid $45,360 to raze the old buildings and sold salvaged lumber and brick for $6,804. Legal fees of $1.998 were paid for title investigation and drawing the purchase contract. Shamrock paid $2,376 to an engineering firm for a land survey, and $73.440 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $1,620, and a liability insurance premium paid during construction was $972. The contractor's charge for construction was $2.959.200. The company paid the contractor in two installments: $1.296,000 at the end of 3 months and $1,663,200 upon completion. Interest costs of $183.600 were incurred to finance the construction. Determine the cost of the land and the cost of the building as they should be recorded on the books of Shamrock Co. Assume that the land survey was for the building, Cost of the Land $ Cost of the Building $

Answer 1

Answer
Explanation :
Cost of the land	$           4,74,174
Cost of the Building	$         32,19,588
Calculation of cost of land	Amount
Land	$           4,32,000
razing	$              45,360
Salvage	$               -6,804
Legal fees	$                1,998
Title Insurance	$                1,620
Cost of land	$           4,74,174
Calculation of Cost of Building	Amount
Survey	$                2,376
Plans	$              73,440
Liability Insurance	$                   972
Contruction	$         29,59,200
Interest cost capitalized	$           1,83,600
Cost of Building	$         32,19,588