13)a company purchased a 3-acre tract of land for a building site for $350,000. the company demolished the old building at a cost of $12,000, but was able to sell scrap from the building for $1,500. the cost of title transfer was $900 and attorney fees for reviewing the contract was $500. property taxes paid were $3,000, of which $250 covered the period after the purchase date. the capitalized cost of the land is:

A fixed asset's cost base on a company's balance sheet is increased by an expense known as a capitalized cost. Fixed asset construction or acquisition involves capitalized expenses.
Capitalized expenses are recognized over time through depreciation or amortization rather than being expensed in the period in which they were incurred.
The useful life assumption affects the decision of whether to capitalize or expense an item in accounting. Those with projected long-term advantages (>1 year) are capitalized, whereas costs with anticipated short-term benefits ( 1 year) are incurred expenses.
A cost or expense is capitalized when it is recorded on the balance sheet with the intention of postponing the item's full realization.
In general, capitalization costs is advantageous since businesses may amortize or depreciate them when they incur new assets with extended lifespans. Capitalization is the term for this action.

Given data :

The computation of capitalized cost of the land is shown below:-

Capitalized cost of the land = Purchase cost + Demolition of old building + Cost of Title insurance + Attorney fees + Property taxes paid - Scrap value of the building

= 350000 + 12000 + 900 + 500 +( 3000 - 250) - 1500

=366150 - 1500

= 364650

So, for computing the capitalized cost of the land we simply applied the above formula.

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