Q.16 -

Fullerton Waste Management purchased land and a warehouse for $800,000. In addition to the purchase price, Fullerton made the following expenditures related to the acquisition: brokers commission, $50,000; title insurance, $13,000; miscellaneous closing costs, $16,000. Assume that Fullerton decides to use the warehouse rather than demolish it. An independent appraisal estimates the fair values of the land and warehouse at $675,000 and $225,000, respectively. Determine the amounts Fullerton should capitalize as the cost of the land and the building.

Capitalized cost of land Capitalized cost of building