On July 5, 20X1, Piney Woods Company purchased a site for its new headquarters for $320,000. At a cost of $25,000, it razed two existing houses, with a total appraised value of $52,700, and received $13,100 from salvage. The firm also paid $7,500 in attorney’s fees, $1,250 in inspection fees, and $550 for a permit to raze the houses. After the houses were razed, the firm incurred these costs:
$25,000 for fill dirt for the site
$18,000 for leveling the site
$42,000 for paving sidewalks and curbs
$53,550 for paving a parking lot
$1,897,500 for construction costs of new building

INSTRUCTIONS
Compute the capitalized costs of (1) the land, (2) the building, and (3) the land improvements.
Analyze: What net effect did these transactions have on the total owner’s equity?