Let's Party with Falcon Waste Management!
How much did Falcon Waste Management spend on purchasing land and a warehouse?
Falcon Waste Management purchased land and a warehouse for $740,000. In addition to the purchase price, Falcon made the following expenditures related to the acquisition: broker’s commission, $44,000; title insurance, $10,000; miscellaneous closing costs, $13,000. The warehouse was immediately demolished at a cost of $32,000 in anticipation of the building of a new warehouse. Determine the amounts Falcon should capitalize as the cost of the land and the building.
What is the total cost Falcon Waste Management should capitalize for the land?
Answer:
Falcon Waste Management should capitalize a total of $807,000 as the cost of the land, which includes the purchase and the initial additional expenditures.
Falcon Waste Management sure knows how to party with their recent purchase of land and a warehouse! They spent $740,000 on the purchase, and on top of that, they splurged on additional expenditures, including a broker’s commission of $44,000, title insurance costs of $10,000, and miscellaneous closing costs of $13,000. Talk about going big!
But wait, the fun didn't stop there! They also immediately demolished the warehouse for $32,000, all in anticipation of building a brand new, shiny warehouse. It's like they're throwing a massive warehouse-warming party! Falcon Waste Management is definitely ready to invest in their future.
Now, when it comes to capitalizing the costs, Falcon Waste Management should include all these expenses in the total cost of the land. The demolition costs are associated with the warehouse and would be considered in the subsequent capitalization of the new warehouse. So, the final answer is $807,000 as the total cost of the land to be capitalized. Cheers to Falcon for their exciting new venture!