Question

On February 1, 2020, Bramble Corp. purchased a parcel of land as a factory site for $315000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2020. Costs incurred during this period are listed below: Demolition of old building $ 22000 Architect's fees 35400 Legal fees for title investigation and purchase contract 5600 Construction costs 1401000 (Salvaged materials resulting from demolition were sold for $10000.) Bramble should record the cost of the land and new building, respectively, as

Answer 1

Answer and Explanation:

The computation of the cost of the land and the new building is as follows

For land

= Purchase value + demolition of old building + legal fees - salvage materials

= $315,000 + $22,000 + $5,600 - $10,000

= $332,600

And, for building it is

= Architect fees + construction cost

= $35,400 + $1,401,000

= $1,436,400

Hence, the same is to be considered