Answer:
Capitalized cost of land = $455,700
Capitalized cost of building = $ 195,300
Explanation:
All the costs of purchasing the land and warehouse should be capitalized so we first have to sum all the costs
Cost of land and warehouse $610,000
+
Brokers comission $31,000
+
title insurance $3,500
+
miscellaneous closing costs $6,500
------------------
Total cost to be capitalized $651,000
Then you must devide into cost of land and cost of building
For this we will use the independent appraisal estimates
Land $497,000/($497,000+$213,000)=0,7
Building $213,00/($497,000+$213,000)=0,3
Then Capitalized cost of land would be $651,000*0,7=$455,700
Capitalized cost of building would be $651,000*0,3=$195,300
