A company purchased land for $70,000 cash. $7,000 was spent for demolishing an old building on the land before construction of a new building could start. The cost of land would be recorded at

Question

Quizplus · Accepted Answer

The cost of land includes the purchase price plus any additional costs necessary to get it ready for its intended use. Demolishing an old building to clear the land is considered a necessary cost to prepare the land for its new use, so the total cost recorded for the land would be $70,000 (purchase price) + $7,000 (demolition) = $77,000.

A Company Purchased Land for $70,000 Cash