Fastball Delivery Company acquired an adjacent lot of construct a new warehouse,

Question

Fastball Delivery Company acquired an adjacent lot of construct a new warehouse, paying $30,000 and giving a short-term note for $270,000. Legal fees paid were $1,425, delinquent taxes assumed were $12,000 , and fees paid to remove an old building from the land were $18,000. Materials salvaged from the demolition of the building were sold for $4,500. A contractor was paid $910,000 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.

Please write out the answer to the problem. Thank you!

Explanation / Answer

Cost of Land will include all expenses & costs incured to make the Land vacant & ready for new construction. SO Cost component of Land are :- Cash $30,000 Short Term Note $270,000 Legal Fee $1425 Taxes due $12000 Exp to remove old Bldg $18500 ---------------------------------------- Cost of Land $331925 Less Salvage Mat cost $4500 ------------------------------------- Cost of Land in Books $327425 Amount paid to contrator for warehouse will be included in the warehouse cost

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