Brief Exercise 10-3 (Static) Lump-sum acquisition [LO10-2]

Falcon Waste Management purchased land and a warehouse for $600,000. In addition to the purchase price, Falcon made the following expenditures related to the acquisition: brokers commission, $30,000; title insurance, $3,000; miscellaneous closing costs, $6,000. Assume that Falcon decides to use the warehouse rather than demolish it. An independent appraisal estimates the fair values of the land and warehouse at $420,000 and $280,000, respectively.

Determine the amounts Falcon should capitalize as the cost of the land and the building.