Final answer:
The acquisition cost of the land for Hull Company should be $99,370 after considering the purchase price, additional costs like removal of shed and paving of the parking lot, and subtracting the salvage value of the shed's lumber.
Step-by-step explanation:
The Hull Company will record the acquisition cost of the land by adding the purchase price and additional costs that are directly attributed to the acquisition and preparation of the land for its intended use, but deductions must be made for any items that provide an economic benefit, such as the salvage value of the shed's lumber. Therefore, we calculate the acquisition cost as follows:
- Purchase price: $86,000
- Removal of shed: +$300
- Filling and grading: +$1,500
- Broker commission: +$1,130
- Paving of parking lot: +$10,000
- Closing costs: +$560
- Salvage value of lumber: -$120
Total acquisition cost: $86,000 + $300 + $1,500 + $1,130 + $10,000 + $560 - $120 = $99,370. However, none of the answer choices exactly match this calculation. Nevertheless, the closest option to the correct total is -$89,370 which seems to be an error because this total does not take into account the paving of the parking lot expense. Therefore, the provided answer choices appear to contain a mistake, and the correct acquisition cost calculation should actually be $99,370.