McCoy\'s Fish House purchases a tract of land and an existing building for $910,
ID: 2545360 • Letter: M
Question
McCoy's Fish House purchases a tract of land and an existing building for $910,000. 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 titie insurance of $2,100. The company also pays $12,200 in property taxes, which includes $8,100 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $4,100 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $45,500 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $3,200 and pays an additional $10,100 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
Ans:
Cost of land=Purchase price + title insurance+ back property taxes + cost of removing building+ cost to level building - salvaged building
=910000+2100+8100+45500+10100-3200
=$972600.