Question

Problem 7-1B Determine the acquisition cost of land and building (LO7-1)

The Italian Pizza Company purchased land as a factory site for $89,000. Prior to construction of the new building, the land had to be cleared of trees and brush. Construction costs incurred during the first year are listed below:

Problem 7-1B Determine the acquisition cost of land and building (LO7-1) The Italian Pizza Company purchased land as a factory site for $89,000. Prior to construction of the new building, the land had to be cleared of trees and brush. Construction costs incurred during the first year are listed below: Land clearing costs Sale of firewood to a worker Architect fees (for new building) Title investigation of land Property taxes on land (for the first year) Building construction costs $ 4,900 (410) 29,000 3,400 2,900 390,000 Required: Determine the amounts that the company should record in the land and the new building accounts. (Amounts to be deducted should be indicated by a minus sign.) Land Building

Answer 1

Answer Page No Amounts that the company should record in the land van the nece building accounts In this, the property taxes on the land of $2900 will be recorded as property tax expense over the first year. 1. Particular hand . Building Purchase price of land $ 89000 Land cleaning cools $4900 Sale of firewood to a wooker ($410) Architect fees $ 29000 Title investigation of land $3400 Building construction cordo $390,000 - Total amounts $ 96890 419000