Urgent help on accounting homework please? Key Company purchased land for $350,0

Question

Urgent help on accounting homework please?

Key Company purchased land for $350,000 with intentions to construct an office building on the site. At the time of the closing, Key Company paid closing costs of $5,000, title fees of $800, and attorney's fees of $3,200. When Key Company purchased the land, removal of an old building was completed in preparation for the new building at a cost of $8,000. However, Key Company was able to sell a portion of the building materials retrieved from the old, demolished building to a local contractor for $2,000. After $21,000 was paid to grade the property, a building was constructed at a total cost of $600,000.

Required:

Based on the previous information, identify the total acquisition costs for the land and the building.

Explanation / Answer

Cost of Land includes all the cost incurred to make it usable for the construction

Thus cost of Land include Purchase price all the cost paid for title clearance and legal charges.

Acquisiton cost of Land and Building will be as under

Purchase cost $350,000

Closing Cost $ 5,000

Title Fees $ 800

Attorney's Fees $ 3,200

Removal cost of Old Building $ 6,000

(Net of realised cost)

Cost of grading of Property $21,000

Total Acquisition Cost of Land & Building = $386,000

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