Johnson Company acquires land and building for $4,000,000 including all fees related to acquisition. The land is appraised at $2,700,000 and the building at $2,100,000. The building is then renovated at a cost of $750,000. What amount is capitalized to the building account?
A) $2,078,125
B) $4,000,000
C) $2,375,000
D) $2,500,000

Question

Quizplus · Accepted Answer

The cost of the building is $2,100,000 and the renovation costs of $750,000 should be added to the initial cost, for a total of $2,850,000. This amount should be capitalized to the building account. Therefore, the best choice is D.

Johnson Company Acquires Land and Building for $4,000,000 Including All