On-Time Delivery Company acquired an adjacent lot to construct a new warehouse, paying $42,000 and giving a short-term note for $307,000. Legal fees paid were $2,335, delinquent taxes assumed were $11,900, and fees paid to remove an old building from the land were $19,800. Materials salvaged from the demolition of the building were sold for $5,200. A contractor was paid $1,061,000 to construct a new warehouse. Determine the cost of the land to be reported on the balance sheet.

$377,835

Explanation:

The cost of an assets include Purchase Costs and other costs directly related to place to asset in the location and condition intended for use by the management.

Thus, calculation of the Cost of the Land will be as follows :

Cash payment                                                                     $42,000

Short term note                                                                 $307,000

Legal Costs                                                                            $2,335

Delinquent taxes                                                                  $11,900

Fees to remove old buildings ($19,800 - $5,200)            $14,600

Total                                                                                   $377,835

Conclusion :

Therefore, the cost of the land to be reported on the balance sheet is $377,835

one of the appeals of a sole proprietorship is that business expenses are kept separate from your personal income tax return