Question

On March 1, 2017, Beldon Corporation purchased land as a factory site for $58125. An old...

On March 1, 2017, Beldon Corporation purchased land as a factory site for $58125. An old building on the property was demolished, and construction began on a new building that was completed on December 15, 2017. Costs incurred during this period are listed below:

Demolition of old building $3300

Architect's fees for new building $13578

Legal fees for title investigation of land $1649

Property taxes on land for period beginning March 1, 2016 $2084

Construction costs $552822

Interest on construction loan $4179

Salvaged materials resulting from the demolition of the old building were sold for $1786

Required: Determine the amounts that Beldon should expense as operating costs.  Answer in dollars and cents ($ 0.00)

Please explain each step and why??

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Answer #1

Beldon Company

Determination of the amounts the company should expense as operating costs:

Operating costs -

Property taxes on land $2,084

These expenses are recurring in nature, hence expensed and not capitalized.

Other expenses are of capital nature and capitalized either to land or buildings accounts as follows,

Land

Purchase price

$58,125

demolition of old building

$1,514

(3,300 - 1,786)

legal fee

$1,649

Cost of land

$61,288

Building

Architect's Fees

$13,578

Construction Costs

$552,822

Interest on construction loan

$4,179

Building cost

$570,579
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