Vijay Inc. purchased a three-acre tract of land for a building site for $350,000
ID: 2586050 • Letter: V
Question
Vijay Inc. purchased a three-acre tract of land for a building site for $350,000. On the land was a building with an appralsed value of $122,000. The company demolished the old bullding at a cost of $11,300, but was able to sell scrap from the building for $1,650. The cost of title Insurance was $880 and attorney fees for reviewing the contract were $540. Property taxes pald were $3,900, of whlch $310 covered the perlod subsequent to the purchase date. The capitalized cost of the land Is: O $229,190 O $366,620 O $364,660. O $366,310Explanation / Answer
Answer:- $364660
Explanation :- The formula to calculate the capitalized cost of the land are as follows :-
Capitalized Cost of the last = Sales Price + Demolition - Scrap Sold + Title Insurance + legal fees + property tax - prior cost
= $350000 + $11300 -$1650+$880+$540+$3900-$310
= $364660
Answer:- $830,000
Calculation of goodwill are as follows :-
Particulars Amount ($) Amount ($) Purchase price 2,800,000 Less: Fair value of Net assets: Assets (520000+21500000) 2670000 Less:- Liabilities assumed (700000) 1970000 GOODWILL 830000Related Questions
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