Martin
Buber Co. purchased land as a factory site for $400,000 The process of tearing
down two old buildings on the site and
E10-2 (Acquisition Costs of Realty) Martin Buber Co. purchased land as a factory site
for $400,000 The process of tearing down two old buildings on the site and
constructing the factory required 6 months. The company paid $42,000 to raze
the old buildings and sold salvaged lumber and brick for $6,300 Legal fees of $1,850
were paid for title investigation and drawing the purchase contract. Martin
Buber paid $2,200 to an engineering firm for a land survey, and $68,000 for
drawing the factory plans. The land survey had to be made before definitive
plans could be drawn. Title insurance on the property cost $1,500, and a
liability insurance premium paid during construction was $900 The contractor’s charge
for construction was $2,740,000. The company paid the contractor in two installments:
$1,200,000 at the end of three months and $1,540,000 upon completion. Interest
costs of $170,000 were incurred to finance the construction.
Instructions
Determine
the cost of the land and the cost of the building as they should be recorded on
the books of Martin Buber Co. Assume
that the land survey was for the building
|
Land
|
Building
|
|
|
Land
|
400,000
|
|
|
Razing Costs
|
42,000
|
|
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