Question
Carmela Company commenced operations at the beginning of the current year. The following costs are incurred by the entity: Payment for land 1,000,000 Payment of
Carmela Company commenced operations at the beginning of the current year. The following costs
are incurred by the entity:
Payment for land
1,000,000
Payment of property taxes in arrears
40,000
Title search and insurance
50,000
Option paid for an alternative land which was not acquired
30,000
Cost of relocating squatters
10,000
Special assessment for city improvements on water and sewer system
150,000
Demolition of old building on land, net of salvage of P 10,000
100,000
Survey before construction of new building
60,000
Contract price for factory building
5,000,000
Architect fee
230,000
Building permit or payment to city hall for approval of building
construction
120,000
Excavation before new construction
110,000
Safety fence around construction site
35,000
Safety inspection on building
30,000
Removal of safety fence after completion of factory building
20,000
New fence surrounding the factory
80,000
Driveways, parking bays and safety lighting
550,000
Cost of trees, shrubs and other landscaping
250,000
What amount should be reported respectively as initial measurement of the land and building?
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Rockford Practice Set To Accompany Intermediate Accounting
Authors: Donald E. Kieso
16th Edition
1119287936, 9781119287933
