E7-22A. (Learning Objective 1: Measure the cost of plant assets) Murphy Self Storagepurchased land, paying $160,000 cash as a down payment and signing a $185,000 note payablefor the balance. Murphy also had to pay delinquent property tax of $2,000, title insurance costing$6,000, and $11,000 to level the land and remove an unwanted building. The company paid$58,000 to add soil for the foundation and then constructed an office building at a cost of $700,000.It also paid $52,000 for a fence around the property, $11,000 for the company sign near theproperty entrance, and $3,000 for lighting of the grounds. What is the capitalized cost of eachof Murphy’s land, land improvements, and building?

Question

E7-22A. (Learning Objective 1: Measure the cost of plant assets) Murphy Self Storage
purchased land, paying $160,000 cash as a down payment and signing a $185,000 note payable
for the balance. Murphy also had to pay delinquent property tax of $2,000, title insurance costing
$6,000, and $11,000 to level the land and remove an unwanted building. The company paid
$58,000 to add soil for the foundation and then constructed an office building at a cost of $700,000.
It also paid $52,000 for a fence around the property, $11,000 for the company sign near the
property entrance, and $3,000 for lighting of the grounds. What is the capitalized cost of each
of Murphy’s land, land improvements, and building?

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