Question

Massey Corporation purchased a piece of land for $60,000. Massey paid attorney's fees of $5,000 and brokers' commissions of $4,000 in connection with the purchase. An old building on the land was torn down at a cost of $3,000, and proceeds from the scrap were $700. Massey also assumes $5,000 of property taxes on the land owed by the previous owner. How much is the total cost of the land?

Answer 1

The total cost of the land for Massey Corporation is $76,300, which includes the purchase price, attorney's fees, brokers' commissions, demolition costs, proceeds from scrap, and assumed property taxes.

Step-by-step explanation:

The total cost of the land purchased by Massey Corporation includes several additional expenses beyond the purchase price. The initial land cost is $60,000, plus attorney's fees of $5,000, and brokers' commissions of $4,000. Additionally, the company incurred a cost of $3,000 for demolishing an old building on the property, though this was offset by $700 from selling scrap from the demolition. Finally, Massey assumes the previous owner's property tax liability of $5,000.

Here's the breakdown:

• 
  
• Land purchase cost: $60,000
• 
  
• Attorney's fees: $5,000
• 
  
• Brokers' commissions: $4,000
• 
  
• Demolition costs: $3,000
• 
  
• Less: Proceeds from scrap: ($700)
• 
  
• Assumed property taxes: $5,000

Adding these amounts together and subtracting the proceeds from the scrap, we get the total cost of the land:

$60,000 + $5,000 + $4,000 + $3,000 - $700 + $5,000 = $76,300

Therefore, the total land cost for Massey Corporation is $76,300.