Question

Compute the cost of land based on the following data.

Purchase price of land                                                 100,000

Assumption of past due property taxes on the land        3,000

Cost of title and attorney fees                                        20,000

Cost of grading land                                                        4,000

Cost to pave parking lot                                                   8,200

Answer 1

Purchase price of land=100,000

Assumption of past due property taxes on the land= 3,000

Cost of title and attorney fees= 20,000

Cost of grading land= 4,000

Cost to pave parking lot = 8,200

Cost of land = Purchase price of land + Assumption of past due property taxes on the land+ Cost of title and attorney fees+Cost of grading land

= 100,000+3,000+20,000+4,000

= $127,000

Cost to pave parking lot is a land improvement cost, hence it will not be included in the cost of land.

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