Problem
On January 2, of the current year Vaughn Inc acquired land for 2,000,000 to be used to construct a new service repair center. The closing cost amounted to 110,000 and Vaughn paid 20,000 for the current years period's property taxes. There was an existing structure on the land that had been abadoned for several years. Vaughan agreed to remove the building and dispose of any scrap materials. The demolition cost was 67000 and the company was required to pay 13800 to remove debris. Vaughn was able to sell scrap materials for 4500
a. Determine the cost of land and any expenses incurred during that acquisition.
b. Prepare the journal entries necessary to record the amount of cost capitalized and the cost charged to expense related to the property's acquisition. Assume that all expenditures wweremade in cash