Reference no: EM132749008
Question: More Cheese Frankie's Homemade Cheese Shop is expanding. The shops along Route 33 have been so successful that Frankie's is building a new cheese superstore along Route 5 in a neighboring state. Frankie's parent company, Dairy Joe Corp., is determining which of the following costs may be capitalized as part of the construction project. Dairy Joe has asked you to draft a capitalization policy describing at what point, and which, costs can be capitalized in a new-build construction project. Address whether the following costs are eligible for capitalization. Also, describe other costs (beyond these) that should be capitalized.
- Architect fees for design of the new store.
- Labor and materials used in the construction project.
- Dairy Joe's own, salaried project manager, who travels to the job site and oversees the construction project. Assume the project manager stays in a hotel near the job site.
- Preliminary site selection-labor hours incurred by the internal project manager.
- Internal legal department hours spent hiring an external construction company.
- Costs to paint the new store
- External legal fees, such as fees paid to lawyers related to purchasing the land on which the store will be built.
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