Question

On March 1, 2019, Cullumber Company acquired real estate on which it planned to construct a small office building. The company paid $75,000 in cash. An old warehouse on the property was razed at a cost of $8,000; the salvaged materials were sold for $1,500. Additional expenditures before construction began included $1,000 attorney’s fee for work concerning the land purchase, $4,000 real estate broker’s fee, $7,000 architect’s fee, and $13,000 to put in driveways and a parking lot. (a) Determine the amount to be reported as the cost of the land.

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cost of land?

Answer 1

ANSWER

Determine the amount to be reported as the cost of the land.
		Land
Company paid $75,000 in cash		$75,000
Old warehouse razed at a cost of $8,000		$8,000
Expenditures before construction began:
$1,000 attorney's fee for work on land purchase	1	$1,000
$4,000 real estate broker's fee		$4,000
$7,000 architect’s fee	Building	0
$13,000 for driveways and parking lot	Land improvement	0
		$88,000
Salvaged materials were sold for $1,500		-1,500
Cost of Land		$86,500

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