Anderson s Fish House purchases a tract of land and an existing building for 900 000 The company plans to remove the old building and construct a new restaurant on the site In addition to the purchase price Anderson pays closing costs including title insurance of 2 000 The company also pays 12 000 in property taxes which includes 8 000 of back taxes unpaid taxes from previous years paid by Anderson on behalf of the seller and 4 000 due for the current fiscal year after the purchase date Shortly after closing the company pays a contractor 45 000 to tear down the old building and remove it from the site Anderson is able to sell salvaged materials from the old building for 3 000 and pays an additional 10 000 to level the land