Baril Company purchased land for $215,000 with the intentions of constructing a new operating facility. The land purchase included a dilapidated building that was removed at a cost of $16,000. The only salvage value from this old building was some materials which were sold for proceeds of $5,000. Baril had paid surveying costs of $2,800 and legal fees related to land transfer of $5,700. The new building was quickly constructed at a total cost of $22,000. Architectural drawings and permits on the construction of this new facility totaled $18,000 and $10,750 respectively. Insurance premiums of $9,200 are paid annually. The production manager is currently on-site facilitating the production start-up. This manager is an annual salary of $85,000.

Instructions

a) Calculate the acquisition cost of the land. Identify each element of cost clearly.

b) Calculate the acquisition cost of the new building. Identify each element of cost clearly.