A company purchased land for $70,000 cash.Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start.Under the cost principle, the cost of land would be recorded at

Question

Quizplus · Accepted Answer

The cost of land includes all expenditures to acquire the land and prepare it for use, including the purchase price, broker's commission, and costs for demolishing the old building. Therefore, $70,000 + $5,000 + $7,000 = $82,000.

A Company Purchased Land for $70,000 Cash