Problem
On march 1, 2016, Caciolo Enterprises acquired real estate on which it planned to construct a small office building. The company paid $9,000 in cash. An old warehouse on the property was razed at a cost of $8, 500; the salvaged materials were sold for $1, 700. Additional expenditures before construction began included:
$1, 100 in attorney's fees for work concerning the land purchase
$5,000 for real estate brokerage commission.
$7, 600 in architect's fees
$14,000 for new driveways and a parking lot.
Determine the amount to be reported as the cost of land.
Determine the amount to be reported as the cost of land improvements.