Question

# On January 6, 2019, Baxter Company purchased a site for a new manufacturing plant for \$2,900,000....

On January 6, 2019, Baxter Company purchased a site for a new manufacturing plant for \$2,900,000. At a cost of \$18,500, it razed an existing facility (fair market value \$250,000) and received \$12,000 from its salvage. The company also paid \$6,900 in attorney fees, \$2,100 in inspection fees, and \$1,400 for a permit to raze the facility. After the facility was torn down, the following costs were incurred: \$55,400 for fill dirt for the site, \$37,000 for leveling the site, \$130,000 for paving sidewalks and curbs, and \$4,700,000 for building costs of the new facility. The parking area was paved at a cost of \$130,700. Required: 1-3. Compute the capitalized cost of the manufacturing plant, land and land improvements. On January 6, 2019, Baxter Company purchased a site for a new manufacturing plant for \$2,900,000. At a cost of \$18,500, it razed an existing facility (fair market value \$250,000) and received \$12,000 from its salvage. The company also paid \$6,900 in attorney fees, \$2,100 in inspection fees, and \$1,400 for a permit to raze the facility. After the facility was torn down, the following costs were incurred: \$55,400 for fill dirt for the site, \$37,000 for leveling the site, \$130,000 for paving sidewalks and curbs, and \$4,700,000 for building costs of the new facility. The parking area was paved at a cost of \$130,700. Required: 1-3. Compute the capitalized cost of the manufacturing plant, land and land improvements.

Baxter Company

1. Computation of the capitalized cost of the manufacturing plant –

Capitalized cost of manufacturing facility     \$4,700,000

1. Computation of the capitalized cost of the land –
 Cost of land acquisition \$2,900,000 Add: cost of razing old building \$18,500 value of salvaged materials (\$12,000) permit to raze \$1,400 \$7,900 Add: Attorney fee \$6,900 Insurance cost \$2,100 Cost of land \$2,916,900

1. Capitalized cost of land improvements –
 Cost of land improvements cost of filling the site 55,400 cost of leveling the site \$37,000 sidewalks and curbs \$130,000 cost of paving parking area \$130,700 cost of land improvements \$253,100

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