Real Angus Steakhouse purchased land for $75,000 cash.They also incurred commissions of $4,500,property taxes of $5,000,and title insurance of $800.The $5,000 in property taxes includes $4,000 in back taxes paid by Real Angus on behalf of the seller and $1,000 due for the current year after the purchase date.For what amount should Real Angus Steakhouse record the land?

Question

Quizplus · Accepted Answer

The cost of the land includes the purchase price, commissions, back taxes, and title insurance. Therefore, the recorded amount is $75,000 + $4,500 + $4,000 + $800 = $84,300. The $1,000 in current year taxes is not included as it is an expense for the current year, not part of the land cost.

Real Angus Steakhouse Purchased Land for $75,000 Cash