The Smooth Rock Falls Resort (Smooth)

is a luxury hotel and spa in Atlantic Canada. Recently, Smooth built a new restaurant on its grounds. The new restaurant is an expansion of the existing main building and was built by Holyrood Construction Inc. (Holyrood). The following costs were incurred to build the restaurant:

Required:
Determine the amount that should be capitalized as part of the cost of the restaurant.
Explain your reasoning for including or excluding each item in the capitalized cost.

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a. Building permits b. Design costs c. Redesign costs required to make changes that Smooth wanted after construction began d. Cost of digging the foundation e. Cost to remove and reconstruct the wall of the existing building where the new restaurant will be attached $ 2,000 48,000 5,000 35,000 26,000 f. Amount paid to Holyrood for construction of the restaurant g. Damage and repairs to an adjacent property caused when heavy equipment was brought onto the site to do the excavation 350,000 22,000 h Cost of meals served to workers i. Penalties paid to Holyrood because Smooth didn't want construction to be done on certain regular working days j. Special electrical wiring for the sound system 2,000 9,000 15,000