Acquisition of Land and Building

On February 1, 2016, Edwards Corporation purchased a parcel of land as a factory site for $100,000. It demolished an old building on the property and began construction on a new building that was completed on October 2, 2016. Costs incurred during this period are:

Demolition of old building	$ 8,000
Architect's fees	25,000
Legal fees for title investigation and purchase contract	4,000
Construction costs	650,000

Edwards sold salvaged materials resulting from the demolition for $2,000.

Required:

1. At what amount should Edwards record the cost of the land and the new building, respectively?

If an input box should be blank, enter a zero.

	Land	Building
Purchase price of land	$	$
Demolition of old building
Architect's fees
Legal fees
Construction costs
Salvaged materials
Total	$	$

2. If management misclassified a portion of the building's cost as part of the cost of the land, what would be the effect on the financial statements?