McCoy's Fish House purchases a tract of land and an existing building for $980,000. The company plans to remove the old building and construct a new restaurant on the site. In addition to the purchase price, McCoy pays closing costs, including title insurance of $2,800. The company also pays $13,600 in property taxes, which includes $8,800 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $4,800 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $49,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials from the old building for $4,600 and pays an additional $10,800 to level the land. Required:
Determine the amount McCoy's Fish House should record as the cost of the land.

McCoy's Fish House

The amount McCoy's Fish House should record as the cost of the land is:

$1,038,000

Explanation:

a) Data and Calculations:

Purchase price               $980,000

Title insurance                      2,800

Tearing down old building 49,000

Salvaged materials             (4,600)

Levelling the land               10,800

Total cost of the land $1,038,000

b) The costs that should be included in the cost of the land include all expenses that are necessary to bring the land to a usable condition.  This cost should include the cost of preparing the land for the construction of the new restaurant.  The property taxes paid are not necessary expenses that would bring the land to use.  That is why they should be excluded, especially since they were paid as unpaid taxes and for the current year.

answer; ///i believe the best answer from the above question is (c) a method of making a purchase by trading items instead of using money; plz check first.good luck

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