Acquisition of Land and Buildings
Skyline Corporation has decided to expand its operations and has purchased land in Salina for construction of a new manufacturing plant. The following costs were incurred in purchasing the property and constructing the building:
|
Land purchase price |
$ 140,000 |
|
Payment of delinquent property taxes |
22,000 |
|
Title search and insurance |
7,000 |
|
City improvements for water and sewer |
19,500 |
|
Building permit |
6,000 |
|
Cost to destroy existing building on land ($5,000 worth of salvaged material |
|
|
used in new building) |
24,000 |
|
Contract cost of new building |
1,800,000 |
|
Land improvements—landscaping |
76,000 |
|
Sidewalks and parking lot |
41,000 |
|
Fire insurance on building—1 year |
20,000 |
The depreciated value of the old building on the books of the company from which the land was purchased was $29,000.The old building was never used by Skyline.
Instructions:
1. Determine the costs of the land and land improvements. Show clearly the elements included in the totals.
2. Determine the cost of the new building. Show clearly the elements included in the total.