Vijay Inc. purchased a three-acre tract of land for a building site for $320,000.

On the land was a building with an appraised value of $120,000.

The company demolished the old building at a cost of $12,000, but was able to sell scrap from the building for $1,500.

The cost of title insurance was $900 and attorney fees for reviewing the contract were $500.

Property taxes paid were $3,000, of which $250 covered the period subsequent to the purchase date.

The capitalized cost of the land is:

a. $336,400.
b. $336,150.
c. $334,650.
d. $201,150.

Respuesta :

Answer:

c. $334,650.

Explanation:

The computation of the capitalized cost of the land is shown below:

= Purchase value of land for building + demolished value of old building + cost of title insurance + attorney fees + property taxes - scrap value from the building

= $320,000 + $12,000 + $900 + $500 + 2,750 - $1,500

= $334,650

The property taxes would be

= Property taxes paid - covered amount

= $3,000 - $250

= $2,750