Italian Bread Company purchased land as a factory site for $60,000. An old building on the property was demolished, and construction began on a new building. Costs incurred during the first year are listed on the next page:
Demolition of old building ........................................$ 8,000
Sale of salvaged materials ..........................................(1,000)
Architect fees (for new building) .................................15,000
Legal fees (for title investigation of land) .........................2,000
Property taxes on the land (for the first year) .....................3,000
Building construction costs .......................................500,000
Interest costs related to the construction ........................18,000
Required:
Determine the amounts that the company should record in the Land and the Building accounts.