Based on the following data, determine the cost of the land to be reported on the balance sheet.Line Item DescriptionAmountLand purchase price$178,000Broker's commission15,000Payment for demolition and removal of existing building5,000Cash received from sale of materials salvaged from demolished building2,000

The total cost of building includes all those expenses which are incurred to make the land ready to use. It includes costs like purchase price, broker's commission, payment for demolishing, and improvement cost. But this cost should be reduced by the amount received from the sale of salvaged material.Cost of land = Purchase price of land + Broker's commission + Demolishing of building expense - Salvage of materials = $ 178,000 + $ 15,000 + $ 5,000 - $ 2,000 =$ 196,000 The correct answer is $ 196,000

Answered: Based on the following data, determine…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Based on the following data, determine the cost of the land to be reported on the balance sheet.

Line Item Description	Amount
Land purchase price	$178,000
Broker's commission	15,000
Payment for demolition and removal of existing building	5,000
Cash received from sale of materials salvaged from demolished building	2,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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