Final answer:
The cost of land includes expenses related to land preparation, accrued property taxes assumed by the buyer, and legal fees, but does not include annual property taxes, which are ongoing expenses post-acquisition.
Step-by-step explanation:
The cost of land includes various expenditures that are necessary to prepare the land for its intended use. Among the costs that are included are costs to clear the land, which may entail removing trees, debris, or existing structures to make the land usable. Also included are accrued property taxes assumed by the purchaser, which are taxes that are unpaid at the time of purchase and become the responsibility of the buyer. Furthermore, legal fees associated with the purchase of land, such as costs for ensuring clear title, are also included in the cost of the land. However, annual property taxes are not included in the initial cost of land since these are ongoing operational costs incurred after the acquisition of the property.