11 January, 23:49

# Falcon Company acquired an adjacent lot to construct a new warehouse, paying \$40,000 and giving a short-term note for \$410,000. Legal fees paid were \$13,275, delinquent taxes assessed were \$14,500, and fees paid to remove an old building from the land were \$15,800. Materials salvaged from the demolition of the building were sold for \$6,800. A contractor was paid \$890,000 to construct the new warehouse. What is the cost of the land to be reported on the balance sheet?

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1. 12 January, 00:31
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cost of land on balance sheet is \$486,775

Explanation:

given data

paying = \$40,000

short-term note = \$410,000

Legal fees paid = \$13,275

delinquent taxes assessed = \$14,500

fees paid remove old building = \$15,800

sold = \$6,800

contractor paid = \$890,000

solution

we know here that

Initial cost of land is paying + short-term note

Initial cost of land = 40000 + 410000

Initial cost of land = \$450000

and

total work cost = Legal fees paid + delinquent taxes assessed + fees paid remove old building

total work cost = \$13,275 + \$14,500 + \$15,800

total work cost = \$43,575

so

cost of land on balance sheet is = Initial cost of land + total work cost - sold

cost of land on balance sheet is = \$450000 + \$43,575 - \$6800

cost of land on balance sheet is \$486775

and we know that amount paid to contractor is not consider here as cost of land