Omar Corporation paid \($200,000\) for a tract of land that had an old gas station on it. The gas station was demolished at a cost of \($20,000\) and a new warehouse was constructed on the site at a cost of \($550,000\). In addition, several other costs were incurred:

What value should be assigned to

(a) the tract of land and

(b) the new warehouse? Why?

Transcribed Image Text:

Legal fees (associated with the purchase of the land). Architect fees (associated with the new warehouse).. Interest on the construction loan (for the new warehouse) $35,000 42,000 18,000