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    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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    The cost of land is all costs incurred to make the land suitable for use
    (a) The capitalized cost of land ...

    Solution Summary

    This solution explains how to calculate the capitalized cost of land and factory building in the given financial accounting question.