contestada

Mason Company purchases a piece of land for $200,000. Mason Company paid $4,000 in brokerage commissions, $12,000 to clear and remove an unwanted building, $4,000 for building permits to construct a new building, $600,000 to construct a new building, and $2,000 in delinquent property taxes.

What is the amount to be capitalized (debited) to the Land account from this purchase?

Respuesta :

jepessoa

Answer:

$218,000

Explanation:

The cost of the land includes the purchase price + brokerage commissions + clearing and removing expenses + related taxes:

$200,000 + $4,000 + $12,000 + $2,000 = $218,000

Building permits plus the actual cost of the building must be recorded under a separate asset account (buildings) since they can be depreciated, while land cost cannot.