Robin Company acquires a piece of land on which it intends to build a factory to produce its primary product.The land is listed for sale at $230,000, but Robin Company's real estate broker is able to negotiate a sales price of $210,000.The land contains an old office building that is razed at a cost of $12,500 ($14,500 in costs less $2,000 proceeds from salvaged materials).Robin Company pays a commission to the real estate broker of $11,500 and an attorney's fee of $3,000.On its statement of financial position at December 31, 2011, what amount will Robin Company record as the cost of the land?

Question

Quizplus · Accepted Answer

The cost of the land includes the purchase price, costs to raze the old building, broker's commission, and attorney's fees: $210,000 + $12,500 + $11,500 + $3,000 = $237,000.

Robin Company Acquires a Piece of Land on Which It