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Required:
Determine the amount McCoy's Fish House should record as the cost of the land.

1 Answer

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Answer:

McCoy's Fish House

The amount McCoy's Fish House should record as the cost of the land is:

$

Explanation:

a) Data and Calculations:

Purchase price = $980,000

Title insurance           2,800

Tearing down old

  building                49,000

Salvaged materials  (4,600)

Levelling the land   10,800

Total                 $1,038,000

b) The costs that should be included in the cost of the land include all expenses that are necessary to bring the land to a usable condition.  This cost should include the cost of preparing the land for the construction of the new restaurant.  The property taxes paid are not necessary expenses that would bring the land to use.  That is why they should be excluded, especially since they were paid as unpaid taxes and for the current year.

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Mr. Emile Welch PhD
15.5k 3 10 26
answered 10 months ago