In December 2018,Ami,the Owner of Elm,paid for a Parcel of Land

In December 2018,Ami,the owner of Elm,paid for a parcel of land along with a warehouse on behalf of Elm,the registered owner of the property,for a total cost of $700,000.Ami also paid a real estate commission of $35,000 and legal fees of $5,000 in connection with this purchase,plus $25,000 for the demolition of the warehouse.Elm will reimburse Ami for these costs in January 2019 and will begin construction of an office building on this land.Prior to the purchase,the land and warehouse were appraised at $500,000 and $200,000,respectively.How much should be capitalized to the value of the building in 2018?

A) $0
B) $35,000
C) $235,000
D) $270,000

Correct Answer:

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