Question

Wildhorse Co. acquires land for $80000 cash. Additional costs are as follows. Removal of shed $700 Filling and grading 1200 Salvage value of lumber of shed 190 Broker commission 1200 Paving of parking lot 10000 Closing costs 600 Wildhorse will record the acquisition cost of the land as $80000. $83890. $81800. $83510.

Answer 1

The acquisition cost of the land will be recorded as $83,510

Step-by-step explanation:

In this question, we are asked to state the value in which Wildhorse Co will record the acquisition cost of a land bought.

To do this, we include all the cost except the paving of the parking lot as it is not a required action in the acquisition. Also, we subtract the salvage value of the lumber;

Mathematically we can say we have;

cost of acquiring land + Cost of shed removal + cost of filling and grading + Cost of broker commission + closing cost - salvage value of lumber of sheds

= 80, 000 + 700 + 1,200 + 1,200 + 600 - 190 = $83,510