Question

On March 1, 2014, Zobrist Company acquired real estate, on which it planned to construct a small office building, by paying $79,340 in cash. An old warehouse on the property was demolished at a cost of $8,250; the salvaged materials were sold for $1,680. Additional expenditures before construction began included $1,630 attorney’s fee for work concerning the land purchase, $5,080 real estate broker’s fee, $9,330 architect’s fee, and $13,850 to put in driveways and a parking lot. (a) Determine the amount to be reported as the cost of the land.

Answer 1

$92,620

Step-by-step explanation:

The computation of the amount to be reported as the cost of the land is shown below:

= Cash paid to construct a small office building + demolished cost + attorney fee + real estate broker fee - sale of salvage materials

= $79,340 + $8,250 + $1,630 + $5,080 - $1,680

= $92,620

All that cost which is related to the land is to be recognized.

All other information which is given is not relevant. Hence, ignored it