Use the following information to solve the following questions:
Morocco Corp. purchased land as a factory site for $ 250,000. They paid $ 10,000 to tear down two buildings on the land, and the salvage from these old buildings was sold for $ 1,350. Legal fees of $ 870 were paid for title investigation and making the purchase. Architect's fees were $ 10,300. Title insurance cost $ 600, and liability insurance during construction cost $ 650. Excavation costs were $ 2,610. A contractor was paid $ 600,000 to construct the new building. An assessment made by the city for pavement was $ 1,600. Interest costs during construction were $ 42,500.
-The cost of the land should be recorded at
A) $ 260,120.
B) $ 261,720.
C) $ 262,470.
D) $ 264,070.

Question

Quizplus · Accepted Answer

Cost of land: $250,000
Less: Salvage from old buildings: $1,350
Less: Legal fees: $870
Less: Title insurance: $600
Less: Excavation costs: $2,610
Total cost of land: $244,570
Additional costs:
Architect's fees: $10,300
Liability insurance during construction: $650
Assessment for pavement: $1,600
Interest costs during construction: $42,500
Total additional costs: $55,050
Total cost of land and building: $299,620
Therefore, the cost of land should be recorded at $261,720 ($244,570 + $10,000 + $870 + $600 + $2,610 + $1,600).

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