Dorsey Co has expanded its operations by purchasing a parcel

Dorsey Co. has expanded its operations by purchasing a parcel of land with a building on it from Bibb Co. for $99,000. The appraised value of the land is $25,000, and the appraised value of the building is $103,000. Assuming that the building is razed at a cost of $10,000 so the land can be used for employee parking, what cost should Dorsey Co. record for the land?

Solution

Solution: $99,000 + $10,000 = $109,000

Working: All necessary and ordinary costs incurred by Dorsey Co. in for getting the land ready for its intended use have been considered.