Reference no: EM132972466

Question - On January 1, 2023, Amelia Company decided to expand operations and had purchased land an old building for construction of new manufacturing plant. The following costs were incurred in purchasing the property and constructing the new building:

Purchase price (the old building has no fair value) 2,500,000

Payment of property taxes on the land for 2022 and 2023 (equally for each year) 100,000

Title search and insurance 50,000

Special assessment for city improvements on water and sewer 150,000

Building permit 30,000

Cost to destroy existing building on the land 60,000

Contract cost of new building 7,000,000

Architect fee 200,000

Sidewalk and parking lot 100,000

Fire insurance on building - 1 year 40,000

Required -

1. What is the cost of the land?

A. 2,860,000 C. 2,800,000

B. 2,810,000 D. 2,750,000

2. What is the cost of the building?

A. 7,440,000

B. 7,290,000

C. 7,390,000

D. 7,330,000