On March 1, 2024, Beldon Corporation purchased land as a factory site for $72,000. An old building on the property was demolished, and construction began on a new building that was completed on December 15, 2024. Costs incurred during this period are listed below:Demolition of old building$ 5,000Architect’s fees (for new building)11,000Legal fees for title investigation of land8,000Property taxes on land (for period beginning March 1, 2024)4,200Construction costs620,000Interest on construction loan6,000Salvaged materials resulting from the demolition of the old building were sold for $3,200.Required:Determine the amounts that Beldon should capitalize as the cost of the land and the new building. Capitalized cost of land:Total cost of land$0 Capitalized cost of building:Total cost of building$0

An expenditure that is added to the cost base of a fixed asset on the balance sheet of a corporation is referred to as a capitalized cost. When acquiring or constructing a fixed asset, you will incur expenditures that will be capitalized. When expenditures are capitalized, they are not written off as expenses in the period in which they are spent; rather, they are recognized over a period of time via a process known as depreciation or amortization.Particulars Amount Purchase price 72000 Demolition of the old building 5000 Less: Sale of materials 3200 1800 Legal fees for title investigation 8000 The total cost of land 81800Particulars Amount Construction cost 620000 Architect's fees 11000 Interest on the construction loan 6000 Total Cost of building 637000

Answered: On March 1, 2024, Beldon Corporation…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Demolition of old building	$ 5,000
Architect’s fees (for new building)	11,000
Legal fees for title investigation of land	8,000
Property taxes on land (for period beginning March 1, 2024)	4,200
Construction costs	620,000
Interest on construction loan	6,000

Required:

Determine the amounts that Beldon should capitalize as the cost of the land and the new building.

Capitalized cost of land:
Total cost of land
$
0

Capitalized cost of building:
Total cost of building
$
0

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