Landon Co.purchased a $500,000 tract of land that is intended to be the site of a new office complex.Landon incurred additional costs and realized salvage proceeds as follows:
What would be the capitalized cost of the land?

Question

Quizplus · Accepted Answer

The cost of the land is $500,000. 
Additional costs incurred are $60,000 + $20,000 = $80,000. 
Salvage proceeds received are -$1,000. 
Therefore, the capitalized cost of the land would be:

$500,000 + $80,000 - $1,000 = $579,000

Rounding it up to the nearest thousand gives us a capitalized cost of $580,000, which is option C.

Landon Copurchased a $500,000 Tract of Land That Is Intended to to Be