McCoy\'s Fish House purchases a tract of land and an existing building for $900,
ID: 2523404 • Letter: M
Question
McCoy's Fish House purchases a tract of land and an existing building for $900,000. 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 $2,000. The company also pays $12,000 in property taxes, which includes $8,000 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $4,000 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $45,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $3,000 and pays an additional $10,000 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 900000 Title insurance 2000 Back property taxes 8000 Cost of removing the building 45000 Salvaged materials -3000 Level the land 10000 Total cost of the land 962000