Question

At the midpoint of the current year, a $88,000 check is given for land, and the buyer assumes the liability for unpaid taxes in arrears of $2,200 at the end of last year and those assessed for the current year of $1,980.

Determine the cost used for recording the land acquired.

Answer 1

$91,190

Step-by-step explanation:

The cost used for recording the land acquired is shown below;

Cash = $88,000

Add: Property taxes for last year = $2,200

Add: Property taxes current year ($1,980 × 1/2) = $990

Therefore, the total cost of land will be

= $88,000 + $2,200 + $990

= $91,190