Determining Cost of Land Fastball Delivery Company acquired an adjacent lot to c

Question

Determining Cost of Land

Fastball Delivery Company acquired an adjacent lot to construct a new warehouse, paying $28,000 and giving a short-term note for $287,000. Legal fees paid were $1,470, delinquent taxes assumed were $13,800, and fees paid to remove an old building from the land were $17,200. Materials salvaged from the demolition of the building were sold for $4,700. A contractor was paid $957,600 to construct a new warehouse.

Determine the cost of the land to be reported on the balance sheet.
$

Explanation / Answer

Calculation of Cost of Land $ Initial payment             28,000 Short-term note         2,87,000 Legal fees               1,470 Fees to remove old building             17,200 Material salvaged from demolition of building              -4,700 Construction cost to contractor         9,57,600 Cost of Land       12,86,570

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