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30 May, 06:29

On March 1, 2016, Beldon Corporation purchased land as a factory site for $60,000. An old building on the property was demolished, and construction began on a new building that was completed on December 15, 2016. Costs incurred during this period are listed below:Demolition of old building 4,000Architect's fees (for new building) 12,000Legal fees for title investigation of land 2,000Property taxes on land (for period beginning March 1, 2016) 3,000Construction costs 500,000Interest on construction loan 5,000Salvaged materials resulting from the demolition of the old building were sold for $2,000. (a) Determine the amounts that Beldon should capitalize as the cost of the land. (b) Determine the amounts that Beldon should capitalize as the cost of the new building.

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  1. 30 May, 08:30
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    The amount that Beldon should capitalize as the cost of the land IS

    $64,000

    The amount that Beldon should capitalize as the cost of the new building. is $517,000

    Explanation:

    Using the data from the question

    Given that the

    Land Purchase price $60,000 Demolition of old building $2,000 ($ 4,000 - $2,000) Legal fees for title investigation of land 2,000

    The amounts that Beldon should capitalize as the cost of the land IS

    $64,000

    In case of New building - The given data is

    Architect's fees (for new building) 12,000 Construction costs 500,000 Interest on construction loan 5,000

    The amounts that Beldon should capitalize as the cost of the new building. is $517,000
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