On January 6, 2018, the El Gato Corporation purchased a tract of land for a factory site for $500,000. An existing building on the site was demolished and the new factory was completed on October 11, 2018. Additional cost data are shown below:

Title search and transfer documents $1,500

Construction cost of new building 800,000

Real estate and attorney fees 6,200

fines (related to demolition) 500

Architect fees 9,000

Cost to demolish old building 52,000

Salvage recovery from old building (4,000)

• Koch, Inc. data for Week 5 Chapter Review Questions:

Koch, Inc. had the following balances on its 12/31/18 Balance Sheet.

Current assets $25,000

Long term assets 75,000

Total assets $100,000

Current liabilities $10,000

Long term liabilities 50,000

Total liabilities $60,000

Common stock $15,000

Retained earnings 25,000

Total stockholders equity $40,000

Please use the data in the class example problem as the basis for answering this question.

What amount is the proper initial cost of the new equipment?