In year 2, Kilroy Company purchased land for a new office building at a purchase price of $325,000. There was an existing building on the site that was demolished at a cost of $12,000. Scrap from the demolition was sold for $3,500. The building was completed during year 2. In addition, the following costs were incurred:

Question

Business

Roy Harris

17 June, 03:50

In year 2, Kilroy Company purchased land for a new office building at a purchase price of $325,000. There was an existing building on the site that was demolished at a cost of $12,000. Scrap from the demolition was sold for $3,500. The building was completed during year 2. In addition, the following costs were incurred:

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Answers (1)

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Janelle Zamora · Answer 1

c. $ 359,000 $ 1,323,000 $ 0

Explanation:

The computation of given question is shown below:-

Total cost of land = Purchase cost + Demolition Cost + Cost of Attorneys for the Purchase Contract + Grading Cost - Scrape Sold

= $325,000 + $12,000 + $7,500 + $18,000 - $3,500

= $359,000

Total cost of building = Cost of Architect Design + Cost of Building Permits + Cost of Construction of Building

= $40,000 + $8,000 + $1,275,000

= $1,323,000

There are no costs to be reported as expenses because all expenditures have to be capitalized.