Question

A company purchased land for $75,000 cash. commissions of $4,500, property taxes of $5,000, and title insurance of $800 were also incurred. the $5,000 in property taxes includes $4,000 in back taxes paid by the company on behalf of the seller and $1,000 due for the current year after the purchase date. for what amount should the company record the land? multiple choice

O $84,300
O $75,000
O $83,500
O $85,300

Answer 1

The company should record the land for a total of $84,300, which includes the purchase price, commissions, back taxes, and title insurance, while excluding the current year's property taxes. Therefore correct option is a

Step-by-step explanation:

The company should record the land at the total cost incurred for the purchase, which includes the cash paid for the land itself, commissions, property taxes, and title insurance fees.

The back taxes paid on behalf of the seller are part of the land cost, while the current year's property taxes are not.

Therefore, the correct amount for recording the land should be the sum of the purchase price ($75,000), commissions ($4,500), back taxes ($4,000), and title insurance ($800), amounting to a total of $84,300.