Question
Bonita Co. purchased land as a factory site for $472,000. The process of tearing down two old buildings on the site and constructing the factory
Bonita Co. purchased land as a factory site for $472,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months. The company paid $49,560 to raze the old buildings and sold salvaged lumber and brick for $7,434. Legal fees of $2,183 were paid for title investigation and drawing the purchase contract. Bonita paid $2,596 to an engineering firm for a land survey, and $80,240 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $1,770, and a liability insurance premium paid during construction was $1,062. The contractors charge for construction was $3,233,200. The company paid the contractor in two installments: $1,416,000 at the end of 3 months and $1,817,200 upon completion. Interest costs of $200,600 were incurred to finance the construction. Determine the cost of the land and the cost of the building as they should be recorded on the books of Bonita Co. Assume that the land survey was for the building.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started