Gagner clinic purchases land for $175,000 cash. the clinic assumes $1,500 in property taxes due on the land. the title and attorney fees totaled $1,000. the clinic has the land graded for $2,200. what amount does gagner clinic record as the cost for the land?

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Mathematics

Michaela Burns

15 July, 01:17

Gagner clinic purchases land for $175,000 cash. the clinic assumes $1,500 in property taxes due on the land. the title and attorney fees totaled $1,000. the clinic has the land graded for $2,200. what amount does gagner clinic record as the cost for the land?

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Cassidy Colon · Answer 1

If the clinic "assumes" property taxes, it should mean the property taxes were for a past period, so it counts as part of the cost. If the property taxes are for a period after the transaction, it does not count as part of the cost. Finally if property taxes straddle the transaction date, the prorated part prior to that date counts as cost.

Title and attorney fees can count as cost.

Grading the land is what he decides to do after the transaction, so does not count as cost. If this was a condition for the transaction, the previous owner should have paid for it.

Hope everything is clear.