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
$72,700
- Determine the total amount of costs incurred for purchasing the land. 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 Total costs incurred for purchasing land is $48,000+$2,200+$2,600+$600+$8,900+$1,400+$3,000+$6,000=$72,700.
- Record the total cost of land. The total amount incurred for purchasing the land should be recorded on the company’s book as its actual cost, which is $72,700.