Crockett Construction Company purchased a five-acre tract of land with an existing building for $1,500,000. The company plans to remove the old building and construct a new building o the site. In addition to the purchase price, Crockett made the following expenditures:
Commissions to realtors $90,000
Property taxes 6,000
Title insurance 3,000
The $6,000 in property taxes shown above represents delinquent (back) taxes paid by Crockett on behalf of the seller (that is, taxes due from prior periods that the seller had not paid).
Shortly after closing, Crockett paid a contractor $60,000 to tear down the old building and remove the debris from the site. Crockett was able to salvage some of the materials from the old building; these materials were later sold for $5,000. Crockett then paid an additional $6,000 to have the land leveled so that construction on the new building could begin.
What amount should Crockett record as the cost of the land?
|
|
a.
|
$1,500,000
|
|
|
b.
|
$1,599,000
|
|
|
c.
|
$1,660,000
|
|
|
d.
|
$1,665,000
|
|
|
e.
|
none of the above
|