Question

Ayer Self Storage purchased​ land, paying $ 190,000 cash as a down payment and signing a $ 150,000 note payable for the balance. Ayer also had to pay delinquent property tax of $ 2,500​, title insurance costing $ 1,500​, and $ 5 ,000 to level the land and remove an unwanted building. The company paid $ 57,000 to add soil for the foundation and then constructed an office building at a cost of $ 550,000. It also paid $ 51,000 for a fence around the​ property, $ 10,000 for the company sign near the property​ entrance, and $ 11,000 for lighting of the grounds. What is the capitalized cost of each of Ayer​'s ​land, land​ improvements, and​ building?

Answer 1

Ayer self storage- cost of plant asset

1) capitalized cost of land
Land cost (cash payment + notes payable)	$340000
Add:
Delinquent property tax	$2500
Title insurance cost	$1500
Cost of levelling and removing the old building	$5000
total capitalized cost of land	$349000
2) capitalized cost of land improvement
Fencing cost	$51000
Company sign cost	$10000
Lightning cost	$11000
total capitalized cost of land improvement	$72000
3) capitalized cost of building
Soil foundation cost	$57000
Office building cost	$550000
total capitalized cost of building	$607000

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