McCoy\'s Fish House purchases a tract of land and an existing building for $800,
ID: 2511214 • Letter: M
Question
McCoy's Fish House purchases a tract of land and an existing building for $800,000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price, McCoy pays closing costs, including title insurance of $1,000. The company also pays $10,000 in property taxes, which includes $7,000 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $3,000 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $40,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $5,200 and pays an additional $11,100 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.) Total cost of the landExplanation / Answer
Purchase price of land 800000 Title insurance 1000 Back property taxes 7000 Cost of removing the building 40000 Salvaged materials -5200 Level the land 11100 Total cost of the land 853900