Question

A company purchased land for $75,000 cash. Commissions of $4,500, property taxes of $5,000, and title insurance of $800 were also incurred. The $5,000 in property taxes includes $4,000 in back taxes paid by the company on behalf of the seller and $1,000 due for the current year after the purchase date. For what amount should the company record the land?

Answer 1

Answer:

amount that company record the land is  $84,300

Explanation:

given data

Purchase land cost =  $75,000

Commissions = $4,500

insurance = $800

property taxes  = $5,000

back taxes paid = $4,000

due tax due for the current year = $1000

to find out

what amount should the company record the land

solution

we know that here Property taxes for current period will be charges as expense not to be capitalized

so that amount company record the land is here express as

amount  record = Purchase cost + commission + property taxes + insurance   ...........................1

put here value we get

amount  record = $75,000 +  $4,500 + $4,000  + $800

amount  record =  $84,300

so  amount that company record the land is  $84,300