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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Cost of a Fixed Asset

Borges Inc. recently purchased land to use for the construction of its new manufacturing facility and incurred the following costs: purchase price, $125,000; real estate commissions, $9,500; delinquent property taxes, $1,800; closing costs, $3,500; clearing and grading of the land, $12,800.

Required:

Determine the cost of the land.

To determine

Cost of a Fixed Asset:

Cost of a Fixed Asset is the cost incurred on acquiring the Fixed asset and includes any expenditure which is necessary in preparing the asset for its use.

To calculate:

To determine the cost of Land.

Explanation

Cost of Land includes

  1. Purchase price
  2. Brokerage/Commission
  3. Delinquent Property taxes
  4. Closing costs such as attorney title, survey fees
  5. Cleaning and grading costs
  6. Demolition of unwanted buildings minus any salvage...

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