Question

On January 1, 2019, Coopers Industries bought a parcel of land for use in its operations by paying the seller $100,000 in cash and signing a 5-year, 12 percent note payable in the amount of $400,000. In connection with the purchase of the land, Coopers incurred legal fees of $19,000, a real estate agent sales commission of $25,000, surveying fees of $1,000, and an appraisal fee of $5,000. The acquisition cost of the land is?

Answer 1

$550,000

Step-by-step explanation:

The computation of the acquisition cost of the land is shown below:

= Cash payment + note payable amount + legal fees incurred + real estate agent sales commission + surveying fees + appraisal fee

= $100,000 + $400,000 + $19,000 + $25,000 + $1,000 + $5,000

= $550,000

Simply we added the all cost related to the acquisition cost of land so that the exact value can come