On February 1, 2020, Sudan Corp. purchased a parcel of land for $ 300,000 as a factory site. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2020. Costs incurred during this period are listed below: Demolition of old building..............................................................$25,000
Architect's feer .................................................................................35,000
Legal fees for title invertigation and purchase contract.............. $\quad 5,000$
Construction costs............................................................................990,000
(5alvaged materials resulting from demolition were sold for $\$ 10,000$.) Sudan should record the cost of the land and new building, respectively, at

Question

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The cost of the land is $320,000, calculated as the purchase price of $300,000 plus demolition costs of $25,000, minus the $5,000 from the sale of salvaged materials. The cost of the new building is $1,025,000, which includes construction costs of $990,000 and architect's fees of $35,000. Legal fees for title investigation and purchase contract are part of the land acquisition costs, not the building costs.

On February 1, 2020, Sudan Corp 5,000\quad 5,0005,000 Construction Costs $10,000\$ 10,000$10,000

On February 1, 2020, Sudan Corp $\quad 5,000$ Construction Costs $\$ 10,000$