IBM acquired land and a building for a purchase price of$2,290,000. Before purchasing, they paid $30,000 for an appraisalthat determined the fair value of the land as $756,000 and thebuilding as $1,944,000. Additionally, IBM incurred a closing costof $180,000 to complete the transfer. Two days after completion ofthe transfer, the building had a leak that required $75,000 worthof damage to be repaired.
What is the acquisition cost that would be capitalized,individually, to the land and building accounts? Provide referencesto support why each cost, beyond the purchase price, is included orexcluded in the total cost to be capitalized for each asset.
