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Tacos and Tangerines Restaurant is going to build a new restaurant. The company purchased a piece...

  1. Tacos and Tangerines Restaurant is going to build a new restaurant. The company purchased a piece of land for $100,000. An existing building was on the land, and it cost $10,000 to have the building razed. However, Tacos and Tangerines was able to sell some of the salvaged material from the building for $5,000. Tangerines and Tacos installed fencing, a patio, and a sprinkler system for $25,000. Architects fees for the new building are $75,000, and it cost $350,000 to build the new restaurant. They also spent $7,000 in legal costs to purchase the land and paid $6,000 to a title company. Kitchen equipment, dining tables and chairs, and bar equipment totaled $200,000.

  1. How much should Tacos and Tangerines capitalize for the land?
  2. How much should Tacos and Tangerines capitalize for the building?
  3. How much should Tacos and Tangerines capitalize for the land improvements?
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Answer #1
a. Land:
$
Cost of land 100000
Old building razed 10000
Sale value of salvage materials -5000
Legal cost 7000
Title cost 6000
Total 118000
b. Building:
$
Architect's fee 75000
Cost of building 350000
Total 425000
c. Land improvements:
$
fencing, a patio, and a sprinkler system 25000
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