The Reid Co. acquired a piece of land for a new factory paying $100,000. Reid demolished the old building at a cost of $20,000, and sold scrapped material salvaged from the old building for $5,000. The architect's fees were $25,000, and the title insurance upon acquisition of the land was $1,000. The construction period interest was $8,000, and the contractor received $300,000 for the building. A pavement assessment made by the city cost Reid $2,000 at the purchase date.
-The cost of the building recorded by Reid Co.is

Question

Quizplus · Accepted Answer

- Land purchase: $100,000
- Demolition cost: $20,000
- Salvage value: ($5,000)
- Architect's fees: $25,000
- Title insurance: $1,000
- Construction period interest: $8,000
- Pavement assessment: $2,000

Total costs incurred: $151,000

Building cost = Total costs incurred + Contractor's fee
Building cost = $151,000 + $300,000

Building cost = $333,000