Hull Company acquires land for $96,000 cash.Additional costs are as follows: $\begin{array}{lr}
\text { Removal of shed } & \$300 \
\text { Filling and grading } & 1,500 \
\text { Salvage value of lumber of shed } & 120 \
\text { Broker commission } & 1,530 \
\text { Paving of parking lot } & 10,000 \
\text { Closing costs } & 560
\end{array}$
Hull will record the acquisition cost of the land as

Question

Hull Company acquires land for $96,000 cash.Additional costs are as follows: $\begin{array}{lr}
\text { Removal of shed } & \$300 \
\text { Filling and grading } & 1,500 \
\text { Salvage value of lumber of shed } & 120 \
\text { Broker commission } & 1,530 \
\text { Paving of parking lot } & 10,000 \
\text { Closing costs } & 560
\end{array}$ 
Hull will record the acquisition cost of the land as

Quizplus · Accepted Answer

The acquisition cost of the land includes the purchase price and all costs necessary to get the land ready for its intended use. This includes the removal of the shed ($300), filling and grading ($1,500), broker commission ($1,530), and closing costs ($560). The salvage value of the shed ($120) is subtracted. The paving of the parking lot is not included as it is a land improvement. Therefore, the total cost is $96,000 + $300 + $1,500 + $1,530 + $560 - $120 = $99,770.

Hull Company Acquires Land for $96,000 Cash Hull Will Record the Acquisition Cost of the Land as Follows