Determining the Cost of an AssetOmar Corporation paid $200,000 for a tract of land that had an old gas station on it. The gas station was demolished at a cost of $20,000 and a new warehouse was constructed on the site at a cost of $550,000.In addition, several other costs were incurred:Legal fees (associated with the purchase of the land)$35,000Architect fees (associated with the new warehouse)$42,000Interest on the construction loan (for the new warehouse)$18,000 (a) What value should be assigned to the tract of land?$Answer (b) What value should be assigned to the new warehouse?$Answer

Property, plant and equipment are non current asset for the business which means that these are long…

Answered: Determining the Cost of an Asset Omar…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter9: Acquisitions Of Property

Section: Chapter Questions

Problem 46P

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Determining the Cost of an Asset
Omar Corporation paid $200,000 for a tract of land that had an old gas station on it. The gas station was demolished at a cost of $20,000 and a new warehouse was constructed on the site at a cost of $550,000.

In addition, several other costs were incurred:

Legal fees (associated with the purchase of the land)	$35,000
Architect fees (associated with the new warehouse)	$42,000
Interest on the construction loan (for the new warehouse)	$18,000

(a) What value should be assigned to the tract of land?

$Answer

(b) What value should be assigned to the new warehouse?

$Answer

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