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23 November, 17:05

A company purchased land for $96200 cash. Real estate brokers' commission was $3300 and $7200 was spent for demolishing an old building on the land before construction of a new building could start. Proceeds from salvage of the demolished building was $1500. Under the historical cost principle, the cost of land would be recorded at

a. $96200.

b. $106700.

c. $105200.

d. $101900.

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  1. 23 November, 18:56
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    c. $105200.

    Explanation:

    Cost of land = $96,200

    Real estate brokers' commission = $3300

    Cost of demolition of old building = $7200

    Proceed from salvage of demolition = $1500

    Cost of land to be recorded using historical cost principle

    = $96,200 + $3300 + $7200 - $1500

    = $105,200

    Option c. $105200 is right.
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