On December 1, 2007, Logan Co.purchased a tract of land as a factory site for $800,000.The old building on the property was razed, and salvaged materials resulting from demolition were sold.Additional costs incurred and salvage proceeds realized during December 2007 were as follows: $\begin{array}{lr}
\text { Cost to raze old building } & \$ 70,000 \
\text { Legal fees for purchase contract and to record ownership } & 10,000 \
\text { Title guarantee insurance } & 16,000 \
\text { Proceeds from sale of salvaged materials } & 8,000
\end{array}$ In Logan 's December 31, 2007 balance sheet, what amount should be reported as land?

Question

Quizplus · Accepted Answer

The cost of land includes the purchase price and all costs necessary to prepare it for its intended use. This includes the purchase price of $800,000, the cost to raze the old building of $70,000, legal fees of $10,000, and title insurance of $16,000, minus the proceeds from salvaged materials of $8,000. Total: $800,000 + $70,000 + $10,000 + $16,000 - $8,000 = $888,000.

On December 1, 2007, Logan Co In Logan 'S December 31, 2007 Balance Sheet, What Amount