Asked by Calvin Nowicki on Jul 03, 2024
Verified
A company purchased land for $120,000 cash; $7,000 was spent to demolish an old building on the land before construction of a new building could start; and $1,500 was received for material salvaged from the old building.The cost of the land would be recorded at
A) $120,000.
B) $125,500.
C) $127,000.
D) $128,500.
Demolish Old Building
The process of tearing down or destroying an outdated or dilapidated building, often to clear the site for new construction or uses.
Construction
The process of building or assembling infrastructure, buildings, or other substantial physical structures.
- Ascertain the proper allocation of financial outlays in asset acquisition and subsequent expenditures.
Verified Answer
ZK
Zybrea KnightJul 04, 2024
Final Answer :
B
Explanation :
The cost of the land would be recorded at $125,500, which is calculated by adding the purchase price of the land ($120,000) and the cost to demolish the old building ($7,000), then subtracting the amount received for the salvaged material ($1,500). So, $120,000 + $7,000 - $1,500 = $125,500.
Learning Objectives
- Ascertain the proper allocation of financial outlays in asset acquisition and subsequent expenditures.