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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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On January 1, Duane Company purchases land at a cost of $125,000. Duane incurs costs of $2,000 for the closing fees and surveys. Duane also spent $7,500 on clearing costs to prepare the land for use. What is the cost of land to be recorded by Duane?

To determine

Compute the cost of land.

Explanation

Determination of cost:

The procurement or acquisition cost of “property, plant and equipment comprises” of all costs that are required to obtain the benefits to be derived from the asset.

Calculate the cost of land:

Costofland=(Purchasevalueofland+Closing

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