Vijay Inc. purchased a three-acre tract of land for a building site for $320,000. On the land was a building with an appraised value of $121,000. The company demolished the old building at a cost of $12,800, but was able to sell scrap from the building for $1,610. The cost of title insurance was $870 and attorney fees for reviewing the contract were $540. Property taxes paid were $2,500, of which $160 covered the period subsequent to the purchase date. The capitalized cost of the land is:
a) $365,700.b) $364,090.c) $366,050.d) $233,160.

Respuesta :

Answer:

The answer is: Total capitalized cost is $334,940

Explanation:

The capitalized cost of the three acre land lot includes:

  • $320,000 purchasing cost of the lot
  • $12,800 demolition costs
  • $870 cost of title insurance
  • $540 attorney fees
  • $2,340 property taxes ($2,500 - $160)
  • revenue of $1,610 from selling scrap

Total capitalized cost =$320,000+$12,800 + $870 + $540 + $2,340 - $1,610

Total capitalized cost is $334,940