Determining Cost of Land Intermountain Delivery Company acquired an adjacent lot

Question

Determining Cost of Land

Intermountain Delivery Company acquired an adjacent lot to construct a new warehouse, paying $100,000 and giving a short-term note for $700,000. Legal fees paid were $5,000, delinquent taxes assumed were $18,500, and fees paid to remove an old building from the land were $12,000. Materials salvaged from the demolition of the building were sold for $4,000. A contractor was paid $950,000 to construct a new warehouse.

Determine the cost of the land to be reported on the balance sheet: ____________

Explanation / Answer

Cash $100,000
Note $700,000
Legal Fees $5,000

Delinquent Taxes $18,500
Removal Costs $12,000

Sub Total $835,500

Less Salvaged Materials $4000
Total Cost of Land $831,500

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