On January 6, 2014, the Eldorado Corporation purchased a tract of land for a fac

Question

On January 6, 2014, the Eldorado Corporation purchased a tract of land for a factory site for $670,000. An existing building on the site was demolished and the new factory was completed on October 11, 2014. Additional cost data are shown below: Title search and transfer documents $ 1,925 Construction cost of new building 1,152,000 Real estate and attorney fees 8,375 Costs to level the land 4,850 Architects' fees 12,850 Which of the following correctly states the cost that should be recorded for (a) the land and (b) the new building?

a-$685,150/$1,165,150

b-$685,150/$1,164,850

c-$671,925/$1,178,075

d-$698,000/$1,152,000

Explanation / Answer

b-$685,150/$1,164,850

Cost of land = $670,000 + $1,925 + $8,375 + $4,850 = $685,150

Cost of building = $1,152,000 + $12,850 = $1,164,850

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