Answered: $ 179,000 15,400 1,200 2,400 1,400…

$ 179,000 15,400 1,200 2,400 1,400 Purchase price Real estate commissions Legal fees Expenses of clearing the land Expenses to remove old building

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Merchant Company purchased property for a building site. The costs associated with the property were:

What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

Purchase price
$ 179,000
Real estate commissions
15,400
Legal fees
1,200
Expenses of clearing the land
Expenses to remove old building
2,400
1,400

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