A company incurred the following costs associated with the purchase of a piece of land that it will use to re-build an office building: Purchase price of the land $ 600,000 Sale of salvaged parts already on land $ 22,000 Demolition of the old building $ 34,000 Ground-breaking ceremony (food and supplies) $ 3,000 Land preparation and leveling $ 8,200 What amount should be recorded for the purchase of the land?

Question

Bria Chan

Business

18 May, 09:09

A company incurred the following costs associated with the purchase of a piece of land that it will use to re-build an office building: Purchase price of the land $ 600,000 Sale of salvaged parts already on land $ 22,000 Demolition of the old building $ 34,000 Ground-breaking ceremony (food and supplies) $ 3,000 Land preparation and leveling $ 8,200 What amount should be recorded for the purchase of the land?

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Answers (1)

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Joslyn Nguyen · Answer 1

The $620,200 is amount should be recorded for the purchase of the land.

Explanation:

The total amount of purchase of land which is need to be recorded is shown below

= Purchase cost of land - Sale of salvage parts + Demolition of the old building + Land preparation and leveling

= $ 600,000 - $ 22,000 + $ 34,000 + 8,200

= $620,200

The Ground-breaking ceremony is not considered as it is not related to the land

Thus, the $620,200 is amount should be recorded for the purchase of the land.