BRIEF EXERCISES 1 Acquisition Cost LO Orange Blue Inc incur

BRIEF EXERCISES 1, Acquisition Cost LO Orange & Blue, Inc., incurred the following expendi- tures when purchasing land: $47,000 purchase price; $4,500 in taxes; $2,000 of sales commissions, and $13,000 for clearing and grading, of which $8,000 was for removing an old building. Requirec Determine the acquisition cost of the land.

Solution

ACQUISITION COST OF LAND-

PURCHASE PRICE $47,000

TAXES $4500

SALES COMMISION $2000

CLEARING AND GRADING $13000

TOTAL ACQUISITION COST=$66,500

NOTE-REMOVING AN OLD BUILDING IS INCLUDED IN ACQUISITION COST OF LAND AS IT IS THE COST OF PREPARATION ASSOCIATED WITH GETTING THE LAND READY FOR ITS INTENDED PURPOSES.