A company purchased land for $94,000 cash.The 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.Proceeds from salvage of the demolished building were $1,200.Under the historical cost principle, the cost of land is

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Quizplus · Accepted Answer

The cost of land is the purchase price plus any costs incurred to get the land ready for its intended use. In this case, the purchase price was $94,000, the real estate brokers' commission was $5,000, and the cost of demolishing the old building was $7,000. The proceeds from the salvage of the demolished building were $1,200. Therefore, the cost of the land is $94,000 + $5,000 + $7,000 - $1,200 = $104,800.

A Company Purchased Land for $94,000 Cash