Juang Company acquires land for $ 56,000 cash. Additional costs are as follows: Removal of shed $ 1,800
Filling and grading 1,500
Paving of parking lot 10,000
Closing costs 690
Juang will record the acquisition cost of the land as

Question

Quizplus · Accepted Answer

The acquisition cost of the land includes the purchase price and all costs necessary to prepare the land for its intended use. This includes the removal of the shed, filling and grading, and closing costs. Therefore, the total cost is $56,000 + $1,800 + $1,500 + $690 = $59,990. The paving of the parking lot is not included in the land cost as it is considered an improvement.

Juang Company Acquires Land for $ 56,000 Cash