Capitalized Cost of Land/Factory Building
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On May 4th 2006 Stufflebam Company purchased a tract of land as a factory site for 3,000,000. An existing building on the property was demolished, and construction was begun on a new factory building in July 2006 and completed Dec, 15, 2006. Cost data are shown below.
New Building: 14,000,000
Cost of demolished old building: 260,000
Proceeds from sales of salvaged materials from old building: 24,000
Architect's fees for design of building: 500,000
Title insurance and attorney's fee for purchase of land: 120,000
Compute the capitalized cost of (a) the land and (b) the new factory building.
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Solution Summary
This solution explains how to calculate the capitalized cost of land and factory building in the given financial accounting question.
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The cost of land is all costs incurred to make the land suitable for use
(a) The capitalized cost of land ...
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