# 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.

### Accounting

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

### Accounting

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

#### Solutions

Chapter
Section
Chapter 10, Problem 10.3EX
Textbook Problem

## Determining cost of landOn-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
• 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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