5. On December 1, 2014, Hogan Co. purchased a tract of land as a factory site fo

Question

5. On December 1, 2014, Hogan Co. purchased a tract of land as a factory site for $750,000. The old building on the property was razed, and salvaged materials resulting from demolition were sold. Additional costs incurred and salvage proceeds realized during December 2014 were as follows: Cost to raze old building Legal fees for purchase contract and to record ownership Title guarantee insurance $70,000 10,000 16,000 8,000 ds tom site of saraged materials In Hogan's December 31, 2014 balance sheet, what amount should be reported as land? a $776,000. R, $812,000. . $838,000. d $846,000.

Explanation / Answer

All the expenses incurred to aquire the non current asset is capitalised i.e the cost is included in the cost of the asset purchased /acquired.

so the cost is =750000+70000+10000+16000-8000=838000

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