Please illustrate the steps to follow to complete the exercises.
Problem 1. On March 1, 2011, Beldon Corporation purchased land as a factory site for $60,000.00. An old building on the property was demolished, and construction began on a new building that was completed on December 15, 2011. Costs incurred during this period are listed below:
Demolition of old building $ 4,000
Architect's fees (for new building) 12,000
Legal fees for title investigation of land 2,000
Property taxes on land (for period beginning March 1, 2011) 3,000
Construction costs 500,000
Interest on construction loan 5,000
Salvaged materials resulting from demolition of the old building were sold for $2,000.
Required:
Determine the amounts that Beldon should capitalize as the cost of the land and the new building.
Problem 2. Oak tree Company purchased a new machine and made the following expenditures:
Purchase Price $45,000
Sales tax 2,200
Freight charges for shipment of machine 700
Insurance on the machine for the first year 900
Installation of machine 1,000
Required
The machine, including sales tax, was purchased on open account, with payment due in 30 days. The other expenditures listed above were paid in cash.