Allen Co. purchased land as a factory site for $80,000. The process of tearing down two old buildings on the site and constructing the factory required 6 months. The company paid $8,400 to raze the old buildings and sold salvaged lumber and brick for $1,260. It paid legal fees of $370 for title investigation and drawing up the purchase contract. Allen paid $440 to an engineering firm for a land survey, and $13,600 for drawing the factory plans. The land survey had to be made before definitive plans could be drawn. Title insurance on the property cost $300, and a liability insurance premium paid during construction was $180. The contractor's charge for construction was $548,000. The company paid the contractor in two installments: $240,000 at the end of 3 months, and $308,000 upon completion. Interest costs of $34,000 were incurred to finance the construction.
Instructions
Determine the cost of the land and the cost of the building as they should be recorded on the books of Allen Co. Assume that the land survey was for the building.