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 for Real Angus Steakhouse is the purchase price plus all the additional costs incurred to acquire the land. Therefore, the cost of the land is calculated as follows:

Purchase price = $75,000 
Commissions = $4,500 
Property taxes (back taxes) = $4,000 
Property taxes (current year) = $1,000 
Title insurance = $800

Total cost of land = $75,000 + $4,500 + $4,000 + $1,000 + $800 = $84,300

Therefore, Real Angus Steakhouse should record the land at $84,300.

Real Angus Steakhouse Purchased Land for $75,000 Cash