McCoy\'s Fish House purchases a tract of land and an existing building for $940,
ID: 2486175 • Letter: M
Question
McCoy's Fish House purchases a tract of land and an existing building for $940,000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price, McCopy pays closing costs, including title insurance of $2,400. The company also pays $12,800 in property taxes, which includes $8,400 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $4,400 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $47,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $3,800 and pays an additional $10,400 to level the land. Required: Determine the amount McCoy's Fish House should record as the cost of the land. (Amounts to be deducted should be indicated by a minus sign.)Explanation / Answer
Particulars Amount Amount paid to Seller 940000 Closing Cost inclusive of Insurance Cost 2400 Property Tax 8400 Amount paid to Ccontractor to tear down the old building 47000 Amount received from sale of Salvage -3800 Amount paid to level the land 10400 Total amount to be recorded as Cost of Land 10,04,400.00