A company purchased land and incurred the following costs: $\begin{array}{l}
\begin{array}{lll}
\text { Purchase Price }\
\text { Excavation Costs }\
\text { Razing Old Building }\
\text { Broker Fees }\
\text { Cost of a Parking Lot }\
\end{array}
\begin{array}{lll}
\$ 500,000 \
50,000 \
12,500 \
10,000 \
25,000
\end{array}
\end{array}$
What is the cost of the land?

Question

A company purchased land and incurred the following costs: $\begin{array}{l}
\begin{array}{lll}
\text { Purchase Price }\
\text { Excavation Costs }\
\text { Razing Old Building }\
\text { Broker Fees }\
\text { Cost of a Parking Lot  }\
\end{array}
\begin{array}{lll}
\$ 500,000 \
50,000 \
12,500 \
10,000 \
25,000
\end{array}
\end{array}$ 
What is the cost of the land?

Quizplus · Accepted Answer

The cost of the land is the purchase price plus any additional costs directly associated with the acquisition of the land. In this case, that would be the excavation costs, razing old building costs, broker fees, and cost of the parking lot. Therefore:

Cost of Land = Purchase Price + Excavation Costs + Razing Old Building Costs + Broker Fees + Cost of Parking Lot 
Cost of Land = $500,000 + $50,000 + $12,500 + $10,000 + $25,000 
Cost of Land = $597,500

Therefore, the best choice is (C), $572,500.

A Company Purchased Land and Incurred the Following Costs What Is the Cost of the Land? A)$550,000 B)$597,500 C)$572,500

A Company Purchased Land and Incurred the Following Costs What Is the Cost of the Land?
A)$550,000
B)$597,500
C)$572,500