Answer:
Cost of the land = $90,900
Step-by-step explanation:
Cash Paid for the construction = $79,000
Cost of demolition of the old warehouse = $8,000
Salvage (i.e Proceeds from the salvaged materials) = $1,660
Additional Expenditure before construction began
Attorney's fee = $1,160
Real estate broker's fee = $4,400
Architect's fee = $8,660 ( Note that this will be capitalized to building cost)
Driveways and parking lot = $13,800 ( Note that this is capitalized to land improvements)
Sum of additional expenditure = Attorney's fee + Real estate broker's fee
Sum of the additional expenditure = 1160 + 4400
Sum of the additional expenditure = $5,560
Cost of the land = Cash paid + cost of demolition + Additional expenditure - salvage
Cost of the land = 79000 + 8000 + 5560 - 1660
Cost of the land = $90,900
= 5 x 3 ÷ 4
= 4 x 3 ÷ 5
= 4 x 5 ÷3
