Subject: general accounting Greenfield Enterprises purchased land in 2022 for the purpose of constructing anew warehouse. Greenfield incurred the following costs in 2022:•Cost of land: $450,000•Legal fees required to purchase land: $15,000Cost of demolishing an old warehouse on the land: $40,000••Sale of materials from the demolished warehouse: $5,000New warehouse construction costs incurred so far: $180,000At what amount should the land be capitalized?a. $500,000b. $525,000c. $580,000d. None of the above

Step 1: Definition of Capitalization of Land CostCapitalization of land cost means recording all…

Answered: Greenfield Enterprises purchased land…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 43P

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Land should be capitalised at what amount?
On February 1, 2020, Nelson Corporation purchased a parcel of land as a factory site for $320,000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2020. Costs incurred during this period are listed below: Demolition of pold building $20,000 Arcchitects fees $35,000 Legal Fees for title investigation and purchase contract $5,000 Contruction Cost $1,390,000 Salvaged materials resulting from demolition were sold for $10,000. Nelson should record the cost of the land and new building, respectively, as A) $330,000 and $1,425,000.…
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