Question

Travis, Inc. purchased land to build a future office location. In the first​ quarter, the following amounts were​ incurred: Acquisition of land ​$48,000 Broker Fee ​2,200 Surveys and legal fees ​2,600 Land clearing 600 Fencing ​8,900 Install lighting and signage ​1,400 Parking lot ​3,000 Delinquent taxes ​6,000 What amount should be recorded as the cost of the land in the​ corporation's books?

Answer 1

The amount that Travis, Inc. should record as the cost of the land in the books is $53,400.

What are the costs to include in Land?

The costs that are included in land purchase include all the costs necessarily incurred to bring the land to business use.

Data and Calculations:

Land acquisition = $48,000

Broker fee = $2,200

Surveys and legal fees = $2,600

Land clearing = $600

Fencing = $8,900

Lighting and signage = $1,400

Parking lot = $3,000

Delinquent taxes = $6,000

Cost of land:

Land acquisition = $48,000

Broker fee = $2,200

Surveys and legal fees = $2,600

Land clearing = $600

Total cost of land = $53,400

Thus, the amount that Travis, Inc. should record as the cost of the land in the corporation's books is $53,400.

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