Answer:
land purchase price: 50,000
broker fees: 6,000
Grading 1,200
Total: 57,200
Explanation:
land purchase price: 50,000
broker fees: 6,000
Grading 1,200
Total: 57,200
Land improvements like paved parking areas, driveways, fences, outdoor lighting, and so on. Are accounted separately from land as they have a determinate useful life. While the land last forever. Is important for the accounting to represent this.
Also, the demolition cost are not captialize through the new asset. Are a cost relate to the old construction thus, expense As the older asset is being destroyed.
For the value of land the company will include all the cost required to acquire the land and leave it ready to use.
The items and the account that is included in the land account are the Land purchase price with the amount of $50,000, broker fees with the amount of $6,000 and grading with the amount of $1,200.
Land account is a long-term asset account that themes the cost of real property exclusive of the cost of any constructed assets on the property.
It commonly looks as the first item under the balance sheet with the heading of Property, Plant and Equipment without any depreciation.
In the above case, the items included in the land account are its purchase price, broker fees and the grading.
Therefore, the total amount of land account is:
[tex]=\$50,000+\$6,000+\$1,200\\=\$57,200.\\[/tex]
Paved parking areas, driveways, fences, outdoor lighting, signs accounted separately from land as they have a determinate useful life.
For the worth of land, the company will consider all the cost required to acquire the land and leave it ready to use.
Therefore, the total amount of land account is $57,200.
Learn more about the land account, refer to:
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