Brief Exercise 7-1 Determine the initial cost of land (LO7-1) Fresh Veggies, Inc
ID: 2512769 • Letter: B
Question
Brief Exercise 7-1 Determine the initial cost of land (LO7-1)
Fresh Veggies, Inc. (FVI), purchases land and a warehouse for $530,000. In addition to the purchase price, FVI makes the following expenditures related to the acquisition: broker's commission, $33,000; title insurance, $2,300; and miscellaneous closing costs, $6,600. The warehouse is immediately demolished at a cost of $33,000 in anticipation of building a new warehouse.
Determine the amount FVI should record as the cost of the land.
Cost of land:________________?
Explanation / Answer
Purchase price of the Land and warehouse 530000 Brokers Commission 33000 Title Insurance 2300 Misc Closing Costs 6600 Demolished costs 33000 Cost of the Land 604900