On March 1, 2017, Westmorlan Company acquired real estate on which it planned to construct a small office building

On March 1, 2017, Westmorlan Company acquired real estate on which it planned to construct a small office building. The company paid $75,000 in cash. An old warehouse on the property was razed at a cost of $8,000; the salvaged materials were sold for $1,500. Additional expenditures before construction began included $1,000 attorney’s fee for work concerning the land purchase, $4,000 real estate broker’s fee, $7,000 architect’s fee, and $13,000 to put in driveways and a parking lot.

(a)

Determine the amount to be reported as the cost of the land.

Determine the amount to be reported as the cost of the land.

Cost of land
Cash paid $75,000
Net cost of removing warehouse ($8,000 – $1,500) 6,500
Attorney’s fee 1,000
Real estate broker’s fee 4,000
Total $86,500