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eal Angus Steakhouse purchased land for $75,000 cash. They also incurred commissions of $4,500, property taxes of $5,000, and title insurance of $800. The $5,000 in property taxes includes $4,000 in back taxes paid by Real Angus on behalf of the seller and $1,000 due for the current year after the purchase date. For what amount should Real Angus Steakhouse record the land?

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Answer:

Real Angus Steakhouse should record the land at an amount of $84,300

Explanation:

All acquisition costs must be record for the land. with the exception of the property tax paid for the current year after the purchase date as it must be recorded as expenses.

$75,000 land

+

$4,500 commissions

+

$4,000 property taxes

+

$800 title Insurance

--------

$84,300

$1,000 of property taxes paid for the current year after the purchase date is an expense.

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