On March 1, 2017, Oriole Company acquired real estate, on which it planned to co

Question

On March 1, 2017, Oriole Company acquired real estate, on which it planned to construct a small office building, by paying $82,500 in cash. An old warehouse on the property was demolished at a cost of $8,700; the salvaged materials were sold for $1,800. Additional expenditures before construction began included $1,300 attorney’s fee for work concerning the land purchase, $4,750 real estate broker’s fee, $8,800 architect’s fee, and $14,500 to put in driveways and a parking lot. (a) Determine the amount to be reported as the cost of the land.

Explanation / Answer

Ans : Cost of Land to be reported:

Cash Paid ------------------------------------------------------- $ 82,500

Net Cost of removing warehouse($8,700-$1,800)------ $ 6,900

Attorney Fee ---------------------------------------------------- $ 1,300

Real estate Broker's Fee -------------------------------------- $ 4,750

Total ----------------------------------------------- $ 95,450

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