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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
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