Question

Polly Corporation purchases land for $200,000. Polly incurs the following costs associated with the land acquisition: Property taxes for current year $4,000 Delinquent property taxes 8,000 Commission to broker 14,000 Cost of grading 2,000 Cost of land improvements 12,000 What is the amount that Polly should capitalize in the land account

Answer 1

$224,000

Explanation:

The solution of the amount that Polly should capitalize in the land account is given below:-

Amount capitalize in the land account = Purchase of land + Delinquent property taxes + Commission to broker + Cost of grading

= $200,000 + $8,000 + $14,000 + $2,000

= $224,000

Hence, for determining the amount capitalize in the land account we simply used the above formula.