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Rose Fuel Company purchased land for $200,000. Demolition of the existing building on the land totaled $60,000. Rose Fuel sold salvage materials from the building site for $20,000. A few months later Rose Fuel built a production building on the land at a cost of $1,200,000 including site preparation costs of $80,000. Rose Fuel also installed a fence for $10,000 and paved a parking lot for $30,000.
Problem A. What amount should Rose Fuel record for the cost of the land?
Problem B. What amount should Rose Fuel record for the cost of the building?
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