BE9.1 (LO 1) These expenditures were incurred by Shumway Ltd. in purchasing land: cash price $450,000; legal fees $8,500; removal of old building $25,000; cost of clearing and grading $6,500; installation of fence $3,000. What is the cost of the land? Determine cost.

[solution]

All of the expenditures, except the fence, should be included in the cost of the land.

Therefore, the cost of the land is $490,000

(cash price of $450,000 + legal fees of $8,500 + removal of old building $25,000 + clearing and grading costs of $6,500). The fence would be included in the cost of land improvements.

=> I already the answer. I'm just wondering why the installation of a fence is excluded from the cost of the land.