Determining the Cost of an AssetOmar Corporation paid $300,000 for a tract of land that had an old gas station on it. The gas station was demolished at a cost of $20,000 and a new warehouse was constructed on the site at a cost of $550,000.In addition, several other costs were incurred:Legal fees (associated with the purchase of the land)$45,000Architect fees (associated with the new warehouse)$50,000Interest on the construction loan (for the new warehouse)$24,000 What value should be assigned to the tract of land?$Answer What value should be assigned to the new warehouse?$Answer

Cost assignment refers to the process which is used by the company to allocate the cost of product…

Answered: What value should be assigned to the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Determining the Cost of an Asset
Omar Corporation paid $300,000 for a tract of land that had an old gas station on it. The gas station was demolished at a cost of $20,000 and a new warehouse was constructed on the site at a cost of $550,000.

In addition, several other costs were incurred:

Legal fees (associated with the purchase of the land)	$45,000
Architect fees (associated with the new warehouse)	$50,000
Interest on the construction loan (for the new warehouse)	$24,000

What value should be assigned to the tract of land?

$Answer

What value should be assigned to the new warehouse?

$Answer

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