Intermediate Accounting

Posted on 2013-11-25 16:15:00 in Finance by VIVIAN

Martin Buber Co. purchased land as a factory site for $695,200. The process of tearing down two old buildings on the site and constructing the factory required 6 months.



The company paid $72,996 to raze the old buildings and sold salvaged lumber and brick for $10,949. Legal fees of $3,215 were paid for title investigation and drawing the purchase contract. Martin Buber paid $3,824 to an engineering firm for a land survey, and $118,184 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $2,607, and a liability insurance premium paid during construction was $1,564. The contractor’s charge for construction was $4,762,120. The company paid the contractor in two installments: $2,085,600 at the end of 3 months and $2,676,520 upon completion. Interest costs of $295,460 were incurred to finance the construction.



Determine the cost of the land and the cost of the building as they should be recorded on the books of Martin Buberk Co. Assume that the land survey was for the building.



Cost of land = ?

Cost of building = ?

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