A company purchased a 3-acre tract of land for a building site for $450,000. The company demolished the old building at a cost of $22,000, but was able to sell scrap from the building for $2,500. The cost of title transfer was $1,400 and attorney fees for reviewing the contract was $700. Property taxes paid were $8,000, of which $750 covered the period after the purchase date. The capitalized cost of the land is:

$478,850

Explanation:

Calculation to determine what The capitalized cost of the land is:

Using this formula

Capitalized cost of the land = Purchase cost + Old building Demolition + Cost of Title Transfer + Attorney fees + Property taxes paid - Building Scrap value

Let plug in the formula

Capitalized cost of the land= $450,000 + $22,000 + $1,400 + $700 + ($8,000 - $750) - $2,500

Capitalized cost of the land= $450,000 + $22,000 + $1,400 + $700 + $7,250 - $2,500

Capitalized cost of the land= $481,350 - $2,500

Capitalized cost of the land= $478,850

Therefore The capitalized cost of the land is: $478,850

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