Company x bought a house and lot for $1,500,000. The value of the land was appraised at $900,000 and the house valued at $600,000, transactional property sales taxes of 20% apply. The company then demolished the house and cleared the lot at an additional cost of $50,000 and built a commercial tower at a cost of $2,000,000. What is the cost basis of the Commercial tower?

Company x bought a house and lot for $1,500,000. The value of the land was appraised at $900,000 and the house valued at $600,000, transactional property sales taxes of 20% apply. The company then demolished the house and cleared the lot at an additional cost of $50,000 and built a commercial tower at a cost of $2,000,000. What is the cost basis of the Commercial tower?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 3RE: Utica Corporation paid 360,000 to purchase land and a building. An appraisal showed that the land is...

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