Question

Desert Company purchased land to be used as a factory site for $1,250,000. Desert paid $120,000 to tear down two buildings on the land. Salvage was sold for $8,000. Legal fees of $5,220 were paid for title investigation and making the land purchase. Architect’s fees were $46,800. Title insurance cost $3,600 and liability insurance during construction cost $3,900. Excavation cost $15,660. The contractor was paid $4,200,000. Landscaping cost $9,600. Interest costs during construction were $255,000.
The cost of the building that should be recorded by Wilson Co. is:_________

Answer 1

Answer:

$4,269,950

Explanation:

The Cost of an asset include Purchase Cost and other costs directly incurred to put the asset in the location and condition intended for use by management.

Calculation of Cost of the Building :

Architect’s fees             $46,800

Insurance                         $3,600

liability insurance            $3,900

Excavation                     $15,660

Contractor                $4,200,000

Total                          $4,269,950

Therefore,

The cost of the building that should be recorded by Wilson Co. is $4,269,950