Question

On March 1, 2017, Wildhorse Co. acquired real estate, on which it planned to construct a small office building, by paying $85,500 in cash. An old warehouse on the property was demolished at a cost of $9,300; the salvaged materials were sold for $1,920. Additional expenditures before construction began included $1,420 attorney’s fee for work concerning the land purchase, $5,050 real estate broker’s fee, $8,920 architect’s fee, and $15,100 to put in driveways and a parking lot. (a) Determine the amount to be reported as the cost of the land. Cost of land $

Answer 1

$99,350

Step-by-step explanation:

The computation of the cost of the land is shown below:

= Cash paid for construct a small office building + demolished value of old warehouse - sale of salvage material + attorney fee + real estate broker fee

= $85,500 + $9,300 - $1,920 + $1,420 + $5,050

= $99,350

All these costs are related to the cost of the land and the other cost which are mentioned are not related so it would be ignored