Question

Durango, Inc. purchased a parcel of land for $450,000. It paid attorney fees of $3,000 to verify title to the land. In addition, it paid a broker's fee of $7,500 to help find a suitable parcel of land. This parcel of land should be recorded in the accounting records for:_______.
A. $453,000.
B. $450,000.
C. $457,500.
D. $460,500.

Answer 1

Answer:

D. $460,500

Explanation:

Given that

Cost of parcel of land = 450000

Legal fees = 3000

Broker's fees = 7500

Therefore,

Amount recorded as cost of parcel of land is

Cost of parcel of land + legal fees + brokers fee

= 450000 + 3000 + 7500

= $460,500

When purchasing land, fees like commissions, legal fees, bank fees, title fees and other expenses added before the land can be used are considered as part of the land's cost. Hence the answer.

Answer 2

Answer:

D. $460,500

Explanation:

From the question, we have the following values

Purchased of parcel of land = $450,000

Attorneys fees = $3,000

Broker's fees = $7,500

To evaluate this, we need to add every money being spent to purchased the parcel of land

Which we have as

Purchased of parcel of land + attorneys fees + brokers fee which which we have as

= 450000 + 3000 + 7500

= $460,500

Because for one to buy a land, fees been spent on the process of buying the land will be added which will give the total cost of the land.