Answer:
Cost of land is $439,050.
Cost of the building is $2,981,100.
Explanation:
Computation of Cost of the Land
Particular Amount
Land $400,000
Add: Razing $42,000
Add: Legal fees $1,850
Add: Insurance $1,500
Add: Salvage <u>$6,300 </u>
Cost of the land <u>$439,050</u>
Hence, the cost of land is $439,050.
Computation of Cost of the Building
Particular Amount
Survey $2,200
Add: Drawing the factory plan $68,000
Add: Liability insurance premium $900
paid during construction
Add: Contractor's charge for constr. $2,740,000
Add: Interest cost <u>$170,000 </u>
Cost of the building <u>$2,981,100</u>
Hence the Cost of the building is $2,981,100.
