**Understanding the Historical Cost Principle in Real Estate**A company purchased land for $91,000 cash. Real estate brokers' commission was $6,000 and $6,900 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at:- ○ $69,000.- ○ $103,900.- ○ $91,000.- ○ $109,900.### Explanation:The historical cost principle states that assets should be recorded at the cash amount (or its equivalent) at the time that an asset is acquired. This includes all costs necessary to get the asset in place and ready for its intended use. In this scenario, the total cost of the land would include the purchase price, the broker's commission, and the cost of demolishing the old building. - Purchase price of the land: $91,000- Real estate brokers' commission: $6,000- Cost of demolishing the old building: $6,900Adding these amounts together gives:\[\text{Total cost of land} = \$91,000 + \$6,000 + \$6,900 = \$103,900\]So, under the historical cost principle, the cost of the land would be recorded at $103,900.

A company purchased land for $91000 cash. Real estate brokers' commission was $6000 and $6900 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at O $69000. O $103900. O $91000. O $109900.

A company purchased land for $91000 cash. Real estate brokers' commission was $6000 and $6900 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at O $69000. O $103900. O $91000. O $109900.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

3
Diana Company is now a growing company. An acquisition of land and construction of a new building was undertaken. The following information relates to the scenario: Land, at purchase price, P700,000 Legal fees related to land purchase, P45,000 Full construction cost of the new building, P5,780,000 Professional fees paid to the architect, P100,000 Sale of scrap materials from the old building previous situated in the land, P60,000 Demolition cost of old building for the construction of the new building, P90,000 How much is the cost of land? Cost of building? Note: is Sale of Scrap Materials from the old building previous situated in the land under “Land” or “Building” - why? If what is given is “sale of scrap from old building” - that is under “Land” cost or “Building” cost?
Solve
Determine the cost of land. BE9.1 (LO 1), AP These expenditures were incurred by Dobbin Company in purchasing land: cash price $60,000, assumed accrued taxes $5,000, attorney's fees $2,100, real estate broker's commission $3,300, and clearing and grading $3,500. What is the cost of the land? Determine the cost of a truck. PE m
* Your answer is incorrect. Best Iron Manufacturing purchases a piece of land for $700,000. The company also paid: $5,000 in legal fees related to the purchase of the land; $15,000 for a driveway: $8,000 for the fence; and $3,000 in preparing the land for use. What is the value of the land improvement? 26,000 23.000 $15,000 8,000
RenFair Clothing purchased land, paying $80,000 cash and signing a $220,000 note payable. In addition, RenFair Clothing paid delinquent property tax of $1,500, title insurance costing $800, and $4,000 to level the land and remove an unwanted building. Record the journal entry for purchase of the land. Begin by determining the cost of the land. Purchase price of land Add related costs: Total cost of land
Land is purchased for $300,000 Back taxes were paid by the purchaser were $8,100 total costs to demolish an existing building were $15,000 and the costs to clear the land was $18,000 the cost of paving the parking lot was $7,900 the cost of land is ____ and the cost of land improvements is ______ A. $340,000 ; $8,1000 B. $323,100 ; $25,900 C. $341,000 ; $7,900 D. $349,000 ; $0 thanks for help apapreciated it aijrharhjo
Peace Co. purchased land as a factory site for P300,000. Peace paid P30,000 to tear down two building on the land. Salvage was sold for P2,700. Legal fees of P1,740 were paid for title investigation and making the purchase. Architect's fees were P15,600. Land Title insurance cost P1,200. Liability insurance during construction cost, P1300. Excavation cost P5,220. The contractor was paid P1,100,000. An assessment made by the city for pavement was P3,200. Interest costs during construction were P85,000. The cost of the land is The cost of the building is a. 1,201,900b. 1,207,120c. 1,234,420d. none of these
O Determine Cost of Land Four Corners Delivery Company acquired an adjacent lot to construct a new warehouse, paying $29,000 and giving a short-term note for $325,000. Legal fees paid were $2,375, delinquent taxes assumed were $9,200, and fees paid to remove an old building from the land were $22,200. Materials salvaged from the demolition of the building were sold for $5,300. A contractor was paid $1,076,200 to construct a new warehouse. Determin he cost of the land to be reported on the balance sheet.
E3-28
Please help me with all answers and calculation thanku
Please Solve In 20mins