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Determining cost of land On-Time Delivery Company acquired an adjacent lot to construct a new warehouse, paying $90,000 and giving a short-term note for $50,000. Legal fees paid were $1,750, delinquent taxes assumed were $25,000, and fees paid to remove an old building from the land were $9,000. Materials salvaged from the demolition of the building were sold for $1,000. A contractor was paid $415,000 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 10, Problem 10.3EX
Textbook Problem

Determining cost of land

On-Time Delivery Company acquired an adjacent lot to construct a new warehouse, paying $90,000 and giving a short-term note for $50,000. Legal fees paid were $1,750, delinquent taxes assumed were $25,000, and fees paid to remove an old building from the land were $9,000. Materials salvaged from the demolition of the building were sold for $1,000. A contractor was paid $415,000 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.

Expert Solution
To determine

Cost of Land: The cost of land includes the following costs:

  • Purchase price of land
  • Attorney fees
  • Real estate agent commission
  • Legal Fees
  • Delinquent Taxes
  • Title
  • Recording fees
  • Additional expenses :
    • Clearing
    • Filling and leveling of land
    • Removing of old buildings

To determine: the cost of the land to be reported on the balance sheet.

Explanation of Solution

The contractor was paid $415,000 to construct a new warehouse is not included in the co...

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Chapter 10 Solutions

Accounting
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