Answer:
$1,068,000
Explanation:
The cost of land includes the following costs:
• Purchase price of land
• Attorney fees
• Real estate agent commission
• Title
• Recording fees
• Additional expenses :
o Clearing
o Filling and leveling of land
o Removing of old buildings
To Determine the total cost of the land.
Particulars
Amount ($)
Amount ($)
Purchase price of land
1,000,000
Title insurance
3,000
Back property taxes
9,000
Cost of removing the building
45,000
Less: Salvaged material
(5,000)
1,057,000
Level the land
11,000
Total cost of the land
1,068,000
The property tax incurred is a recurring cost. This will reported as an expense for the current year. All other cost is incurred to acquire the land. Therefore, it must be capitalized. Hence, the total amount that company MF should record as the cost of the land is. $1,068,000
Answer:
1,068,000
Explanation:
Computation of cost of land
Purchase price of land 1,000,000
Title insurance 3,000
Back property taxes 9,000
Cost of removing the building 50,000
Salvaged materials -5,000
Cost of Leveling the land 11,000
Total cost of the land 1,068,000
