Question

The Open Grill incurred the following costs in acquiring a new piece of land:Cost of the land $ 80,000. Commissions 4,800.Liability insurance for the first year 1,200. Cost of removing existing building 20,000. Sale of salvaged materials(4,000). Total costs $102,000.
What is the total recorded cost of the land?

A. $102,000.
B. $100,800.
C. $106,000.
D. $80,000.

Answer 1

Answer:

B

Explanation:

we are to calculate the total land cost recorded in this question;

To get the cost recorded we do the following;

Cost of land recorded = cost of land + commissions + cost of removing existing building - sale of salvaged materials on land

cost of land recorded= 80,000+ 4,800 + 20,000 - 4,000 = $100,800

Answer 2

Answer:

$102,000

Explanation:

Cost of land is derived based on the purchase price and every other cost incurred towards preparing it for use. These cost include commission , legal fees , bank charges , survey fees , title search fees , land preparation fees and other.

It is important to know that any form of revenue earned through the land shall be net off against the cost to arrive at the total value.

Cost of the land - $80,000

Commission - $ 4,800

Insurance - $ 1200

Decommissioning cost - $ $20,000

Sales of Salvaged material ($4000)

Total cost = $102,000