Question

Alin Co. purchases a building for $300,000 and pays an additional $30,000 for closing costs (brokerage, title, attorney fees). Alin also pays $20,000 in renovations, including painting, carpet, lighting, etc. Alin should record the cost of the building at:

Answer 1

Answer:

The answer is: $350,000

Explanation:

When Alin Co. establishes the total cost of the building it just purchased, it must include all of the following:

• building's purchase value $300,000
• associated closing costs $30,000
• building improvements and renovations $20,000

So the total cost of the building is $300,000 + $30,000 + $20,000 = $350,000