Question

On February 1, 2020, Crane Company purchased a parcel of land as a factory site for...

On February 1, 2020, Crane Company purchased a parcel of land as a factory site for $318000. 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 $ 21000
Architect's fees 36000
Legal fees for title investigation and purchase contract 5300
Construction costs 1392000
(Salvaged materials resulting from demolition were sold for $10800.)


Crane should record the cost of the land and new building, respectively, as

$328200 and $1433300.

$328200 and $1428000.

$344300 and $1417200.

$333500 and $1428000.

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Answer #1
Crane should record cost of the land and new building $3,33,500 and $14,28,000 respectively
Cost of the Land $
Purchase Price 3,18,000
Add: Demolition of old building 21,000
Add: Legal fee for title investigation 5,300
Less: Salvage material sold -10,800
Cost of the Land recorded 3,33,500
Cost of the New Building $
Construction cost 13,92,000
Add: Architect's fee 36,000
Cost of the New Building recorded 14,28,000
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