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On March 1, 2022, Carla Vista Co. acquired real estate, on which it planned to construct a small office building, by paying $79,000 in cash. An old warehouse on the property was demolished at a cost of $8,000; the salvaged materials were sold for $1,660. Additional expenditures before construction began included $1,160 attorney’s fee for work concerning the land purchase, $4,400 real estate broker’s fee, $8,660 architect’s fee, and $13,800 to put in driveways and a parking lot. (a) Determine the amount to be reported as the cost of the land.

Respuesta :

Answer:

Cost of the land = $90,900

Step-by-step explanation:

Cash Paid for the construction = $79,000

Cost of demolition of the old warehouse = $8,000

Salvage (i.e Proceeds from the salvaged materials) = $1,660

Additional Expenditure before construction began

Attorney's fee = $1,160

Real estate broker's fee = $4,400

Architect's fee = $8,660 ( Note that this will be capitalized to building cost)

Driveways and parking lot = $13,800 ( Note that this is capitalized to land improvements)

Sum of additional expenditure = Attorney's fee + Real estate broker's fee

Sum of the additional expenditure = 1160 + 4400

Sum of the additional expenditure = $5,560

Cost of the land = Cash paid + cost of demolition + Additional expenditure - salvage

Cost of the land = 79000 + 8000 + 5560 - 1660

Cost of the land = $90,900

akiran007

Answer:

Amount to be reported as the cost of the land = $ 91,400

Step-by-step explanation:

Payment of Real Estate= $ 79,000

Building Demolished  $ 8000

Gains on Sale of materials = ($1660)

Attorney’s fee for work concerning the land purchase, $1160

Broker's fee       $4,400

Amount to be reported as the cost of the land = $ 91,400

Broker's fee is included in the purchase of land . Gains on the sale of salvaged materials is deducted  from the cost of land because it is of the building demolished.  Architect's fee is not also included in the cost of land but in the construction costs.

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