Chapter 16 Problem 16-3
Problem 16-3
Land Land Building improvement
Cost of land 2,000,000
Legal fees 10,000
Payment of mortgage 50,000
Payment of taxes 20,000
Cost of razing building 30,000
Proceeds from sale of materials ( 5,000)
Grading and drainage 15,000
Architect fee 200,000
Payment to contractor 8,000,000
Interest cost 300,000
Driveway and parking lot 40,000
Cost of trees, shrubs and other landscaping 55,000
Cost of installing lights in parking lot 5,000
Premium for insurance _______ 25,000 _______
2,120,000 8,525,000 100,000
The payment for medical bills and the cost of open house party are outright expenses because they are not a necessary cost of acquiring the land and building.
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