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 as follows: What would be the capitalized cost of the land?
$$\begin{array} { | l | c | }
\hline \text { Demolition of existing building on site } & \$ 75,000 \
\hline \text { Legal and other fees to close esc row } & 15,000 \
\text { Proceeds from sale of demolition scrap } & 10,000 \
\hline
\end{array}$$

Question

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 as follows: What would be the capitalized cost of the land?
$$\begin{array} { | l | c | } 
\hline \text { Demolition of existing building on site } & \$ 75,000 \
\hline \text { Legal and other fees to close esc row } & 15,000 \
 \text { Proceeds from sale of demolition scrap } & 10,000 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The capitalized cost of the land includes the purchase price plus any additional costs necessary to prepare the land for its intended use, minus any proceeds from the sale of scrap. Therefore, the calculation is: $500,000 (purchase price) + $75,000 (demolition) + $15,000 (legal fees) - $10,000 (scrap proceeds) = $580,000.

Landon Copurchased a $500,000 Tract of Land That Is Intended to to Be