Textbook Problem

Acquisition of Land and Building On February 1, 2019, Edwards Corporation purchased a parcel of land as a factory site for $100,000. It demolished an old building on the property and began construction on a new building that was completed on October 2, 2019. Costs incurred during this period are:

Edwards sold salvaged materials resulting from the demolition for $2,000.

Required:

1. 1. At what amount should Edwards record the cost of the land and the new building, respectively?
2. 2. Next Level If management misclassified a portion of the building’s cost as part of the cost of the land, what would be the effect on the financial statements?