McCoy’s Fish House purchases a tract of land and an existing building for $980,0
ID: 2521046 • Letter: M
Question
McCoy’s Fish House purchases a tract of land and an existing building for $980,000. 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 $2,800. The company also pays $13,600 in property taxes, which includes $8,800 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $4,800 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $49,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $4,600 and pays an additional $10,800 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
cost of land $ purchase price 980,000 Closing cost inculding title insurance 2,800 property taxes due 8,800 demolition of building (49,000-4,600) 49,000 Salvaged material -4,600 levelling of land 10,800 total cost of land 1,046,800 answere