$1.00 Accounting help!!
DETERMINING THE COST TO BE CAPITALIZED FOR ACQUISTION OF ASSETS.
On January 6, 2013, Harris Company purchased a site for a new manufacturing plant for $2,400,000. At a cost of $16,000, it razed an existing facility (fair market value $200,000) and received $10,000 from its salvage. The company also paid $6,400 in attorney fees, $1,850 in inspection fees, and $1,150 for a permit to raze the facility. After the facility was torn down, the following cost were incured: $50,400 for fill dirt for the site, $32,000 for leveling the site, $125,000 for paving sidewalks and curbs, and $4,200,00 for building costs of the new facility. The parking area was paved at a cost of $125,700.
1.) compute the capitalized cost of (1) the manufacturing plant, (2) the land, and (3) the land inmprovements.
Analyze: unfortunately, Harris's new building was not completed on schedule, but the company had to vacate the old building. As a result the business was shut down for two months. during this period, the company reported a net loss of $223,800. The president suggest that the loss should be capitalized as part of the cost of the new building. What is your recommendation?