On March 1, 2007, Geoffrey Company acquired real estate, onwhich it planned to c

Question

On March 1, 2007, Geoffrey Company acquired real estate, onwhich it planned to construct a small office building, by paying$90,000 in cash. An old warehouse on the property was demolished ata cost of $8,200; the salvaged materials were sold for $1,700.Additional expenditures before construction began included $1,500attorney's fee for work concerning the land purchase, $5,000 realestate broker's fee, $9,100 architect's fee, and $14,000 to put indriveways and a parking lot.

Determine the amount to be reported as the cost of the land. $

Explanation / Answer

Cash Payment for Land 90,000.00 Demolition Cost 8,200.00 Attorney's fees 1,500.00 Real Estate Brokers' fees 5,000.00 Architect's Fees 14,000.00 Driveways & parking lot Costs 14,000.00 less : Sale of Salvaged Material (1,700.00) Cost ofLand 131,000.00

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