Answer:
The amount FVI should record is $ 617,200
Explanation:
The amount FVI should record as the cost of the land includes the initial purchase price ,broker's commission,title insurance ,miscellaneous closing costs as well as the cost of dismantling the old warehouse since all of these costs were incurred to bring the asset acquired to its present condition and location.
land purchase price $540,000
broker's commission $34,000
title insurance $2,400
miscellaneous closing costs $6,800
Cost of demolition $34,000
total costs $617,200
Answer:
Cost of land = $617,200
Explanation:
The cost of land includes all of the cost necessary to bring and make it ready for the intended use.
These costs include purchase cost, fees and commission associated with the purchase transaction. Further more, included in the historical cost are the net demolition cost of old structure to prepare the land for use. Net cost here means cost of demolition less any incidental proceed from the old structure.
Therefore the cost of the land would
=540,000 + 34,000 + 2,400 + 6,800 +34,000
= $617,200
