On July 1, 2012, Landon Co. purchased a $500,000 tract of land that is intended to be the site of a new office complex. Landon incurred additional costs and realized salvage proceeds during 2012 as follows: $$\begin{array} { l r }
\text { Demolition of existing building on site } & \$ 75,000 \
\text { Legal and other fees to close escrow } & 15,000 \
\text { Proceeds from sale of demolition scrap } & 10,000
\end{array}$$ What would be the capitalized cost of the land?

Question

On July 1, 2012, Landon Co. purchased a $500,000 tract of land that is intended to be the site of a new office complex. Landon incurred additional costs and realized salvage proceeds during 2012 as follows: $$\begin{array} { l r } 
\text { Demolition of existing building on site } & \$ 75,000 \
\text { Legal and other fees to close escrow } & 15,000 \
\text { Proceeds from sale of demolition scrap } & 10,000
\end{array}$$ What would be the capitalized cost of the land?

Quizplus · Accepted Answer

The capitalized cost of the land includes the purchase price, demolition costs, and legal fees, minus any proceeds from the sale of scrap. Therefore, $500,000 + $75,000 + $15,000 - $10,000 = $580,000.

On July 1, 2012, Landon Co What Would Be the Capitalized Cost of the Land? A)

On July 1, 2012, Landon Co What Would Be the Capitalized Cost of the Land?
A)