Determining the Cost of an Asset
Omar Corporation paid $200,000 for a tract of land that had an old gas station on it.
The gas station was demolished at a cost of $20,000 and a new warehouse was constructed on the site at a cost of $550,000.
In addition, several other costs were incurred:
Legal fees (associated with the purchase of the land)	$35,000
Architect fees (associated with the new warehouse)	$42,000
Interest on the construction loan (for the new warehouse)	$18,000
(1) What value should be assigned to the tract of land?
(2) What value should be assigned to the new warehouse?
3.) Why did you include not included the cost in calculating the values assigned to the two long-lived assets?