Question

Fresh Veggies, Inc. (FVI), purchases land and a warehouse for $520,000. In addition to the purchase price, FVI makes the following expenditures related to the acquisition: broker's commission, $32,000; title insurance, $2,200; and miscellaneous closing costs, $6,400. The warehouse is immediately demolished at a cost of $32,000 in anticipation of building a new warehouse. Determine the amount FVI should record as the cost of the land.

Answer 1

Answer: $519,000

Explanation:

Purchase Price 460000

Add Broker's Commission 26000

Add Title Insurance 1600

Add Misc .Closing Cost 5400

Add Warehouse demolistion cost 26000

Cost of Land 519000

Answer 2

Answer:

The amount FVI should record as the cost of the land=$592,600

Explanation:

Given Data:

Land cost=$520,000

broker's commission=$32,000

title insurance=$2,200

Miscellaneous closing costs=$6,400

Demolition cost=$32,000

Required:

The amount FVI should record as the cost of the land=?

Solution:

Total Cost=Land cost+broker's commission+title insurance+ Miscellaneous closing costs+Demolition cost

Total Cost=$520,000+$32,000+$2,200+$6,400+$32,000

Total cost=$592,600

The amount FVI should record as the cost of the land=$592,600