Question

On March 1, 2022, Blossom Company acquired real estate, on which it planned to construct a small office building, by paying $86,000 in cash. An old warehouse on the property was demolished at a cost of $9,400; the salvaged materials were sold for $1,940. Additional expenditures before construction began included $1,440 attorney’s fee for work concerning the land purchase, $5,100 real estate broker’s fee, $8,940 architect’s fee, and $15,200 to put in driveways and a parking lot.

Required:
(a) Determine the amount to be reported as the cost of the land.

Answer 1

Cost of The Land = $86,000 + $9,400 - $1,940 + $1,440 + $5,100

= $100,000

$100,000.

Step-by-step explanation:

cost of constructing the building = $86,000

cost of demolishing old warehouse = $9,400

cost of salvaged materials = $1,440

Additional expenditures:

Attorney's fee = $5,100

Architects's fee = $8,940

Driveways and parking lot fee = $15,200

Answer 2

Cost of The Land = $86,000 + $9,400 - $1,940 + $1,440 + $5,100

= $100,000

Therefore, Cost of The Land is $100,000.

Step-by-step explanation:

cost of constructing the building = $86,000

cost of demolishing old warehouse = $9,400

cost of salvaged materials = $1,440

Additional expenditures:

Attorney's fee = $5,100

Architects's fee = $8,940

Driveways and parking lot fee = $15,200