Question

Plato Company acquired land with a purchase price of $150,000 plus attorney's fees ($6,000), demolition and removal costs of an old building ($4,000), and grading and filling the land ($3,000). The land should be recorded atA : $157,000.B : $163,000.C : $150,000.D : $137,000.

Answer 1

B) $163,000

Step-by-step explanation:

Plato company should record the land purchase at the following value:

purchasing price = cost of land + legal fees + land improvements

purchasing price = $150,000 + $6,000 + ($4,000 + $3,000) = $163,000

In this case we can include land improvements in the purchase price since they are things that don't wear out. For example, landscaping or sidewalks wear out, so they must be depreciated separately.