Taylor Computer Services Track of Purchases (Coursework Sample)

QUESTION1
Taylor Computer Services purchased a tract of land and contracted with a builder to build an office building, a parking lot, and landscaping. The following transactions resulted from the contractor's activities. Determine the total costs allocated to the land, building, and land improvements accounts.
Purchased land for $135,000
Paid a demolition company $40,000 to remove an old structure on the property
Paid $14,000 in delinquent taxes on the property
Paid the contractor $333,000 to design and build the office building
Paid $34,700 for fencing
Paid $39,500 for paving
Paid an electrical contractor $14,900 for outdoor lighting
Calculate:
a. Cost of land?
b. Cost of building?
c. Cost of land improvements?
Answer
Step 1 Introduction
Cost of land: The cost of land comprises the purchase price (cash plus any notes due), brokerage commissions, survey costs, legal fees, back property taxes, and expenses for grading and clearing the site as well as the removal of undesirable structures.
Cost of Building: The cost of the land, title fees, legal expenses, survey charges, and zoning fees are all included in these expenditures. Site preparation expenses, like as grading and drainage, as well as the cost of razing an existing structure, are also included. All of these expenses might be deemed normal and essential for preparing the land for its intended purpose.
Cost of land improvement: All expenses connected with getting the improvements suitable for use are included in the cost of land improvements.