Cost of a Fixed Asset Borges Inc. recently purchased land to use for the construction of its new manufacturing facility and incurred the following costs: purchase price, $125,000; real estate commissions, $9,500; delinquent property taxes, $1,800; closing costs, $3,500; clearing and grading of the land, $12,800. Required: Determine the cost of the land.

The cost of the Land is determined as $150,800.

Data and Calculations:

Purchase price of Land = $125,000

Real Estate Commissions paid = $9,500

Delinquent property taxes = $1,800

Closing costs = $3,500

Clearing and grading of the land = $12,800

Total cost paid for the land purchase and its preparation for use = $152,600

Cost of the land = $150,800 ($152,600 - $1,800)

Thus, the cost of the Land is $150,800.

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$152,600

Explanation:

The computation of the cost of the land is shown below:

Cost of the land = Purchase price + real estate commissions + delinquent property taxes + closing costs + clearing and grading of the land

= $125,000 + $9,500 + $1,800 + $3,500 + $12,800

= $152,600

We considered all the given information

hence, the cost of the land is $152,600

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