On July 5, 2019, Clear Lake Company purchased a site for its new headquarters for $212,500. At a cost of $20,000, it razed two existing houses, with a total appraised value of $47,500, and received $11,500 from salvage. The firm also paid $6,000 in attorney’s fees, $1,000 in inspection fees, and $350 for a permit to raze the houses. After the houses were razed, the firm incurred these costs:

$20,000 for fill dirt for the site
$15,000 for leveling the site
$40,000 for paving sidewalks and curbs
$52,750 for paving a parking lot
$1,987,500 for construction costs of new building

INSTRUCTIONS
Compute the capitalized costs of

(1) The land,

(2) The building,

(3) The land improvements.
Analyze: What net effect did these transactions have on the total owner’s equity?