On January 6, Year 1, the Mount Jackson Corporation purchased a tract of land for a factory site for $1,500,000. An existing building on the site was demolished and the new factory was completed on October 11, Year 1. Additional cost data are shown below: Which of the following correctly states the capitalized cost of the (a) land and (b) the new building, respectively?

Question

On January 6, Year 1, the Mount Jackson Corporation purchased a tract of land for a factory site for $1,500,000. An existing building on the site was demolished and the new factory was completed on October 11, Year 1. Additional cost data are shown below:  Which of the following correctly states the capitalized cost of the (a) land and (b) the new building, respectively?

Quizplus · Accepted Answer

$1,500,000 purchase price + $15,400 real estate and attorney fees + $133,200 cost to demolish old building - $11,000 salvage from old building = $1,637,600 cost of land; $1,760,000 construction cost + $138,000 architect fees = $1,898,000 cost of building

On January 6, Year 1, the Mount Jackson Corporation Purchased