What are the expenditures related to the acquisition of land and warehouse by Fresh Veggies, Inc.?
The expenditures related to the acquisition of land and warehouse by Fresh Veggies, Inc. are as follows:
- Purchase price of land and warehouse: $450,000
- Broker's commission: $25,000
- Title insurance: $1,500
- Miscellaneous closing costs: $5,200
- Demolition cost for the warehouse: $25,000
Calculation:
The total cost of the land acquisition for Fresh Veggies, Inc. includes the purchase price of $450,000, broker's commission, title insurance, miscellaneous closing costs, and demolition cost. To determine the amount FVI should record as the cost of the land, we need to add up all the expenditures as follows:
Purchase price of land and warehouse: $450,000
Broker's commission: $25,000
Title insurance: $1,500
Miscellaneous closing costs: $5,200
Demolition cost for warehouse: $25,000
Adding all these amounts together:
$450,000 + $25,000 + $1,500 + $5,200 + $25,000 = $506,700
Therefore, the amount Fresh Veggies, Inc. should record as the cost of the land is $506,700.