Calculate the acquisition cost of the land

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Question - Extra Company purchased land for $ 115,000 with the intentions of constructing a new operating facility. The land purchase included a dilapidated building that was removed at a cost of $ 16,000. The only salvage value from this old building was some materials which were sold for proceeds of $ 4,000. Extra had paid surveying costs of $ 1,800 and legal fees related to land transfer of $ 6,700. The new building was quickly constructed at a total cost of $ 422,000. Architectural drawings and permits on the construction of this new facility totaled $ 18,000 and $ 10,650 respectively. Insurance premiums of $ 9,200 are paid annually. The production manager is currently on-site facilitating the production start-up. This manager has an annual salary of $ 85,000.

Required -

a) Calculate the acquisition cost of the land. Identify each element of cost clearly.

b) Calculate the acquisition cost of the new building. Identify each element of cost clearly.

Reference no: EM132925500

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