Patton Company bought real estate, on which there was an old office building, for $600,000. It paid
Question:
Patton Company bought real estate, on which there was an old office building, for $600,000. It paid $50,000 in cash as a down payment and signed a 10% mortgage for the remainder. It immediately had the old building razed at a net cost of $35,000. Attorneys were paid $6,000 in connection with the land purchase and an additional $3,000 in connection with permits and zoning variances necessary for Patton's new office building. $20,000 was paid for excavation for the basement of the new building, $1,400,000 was paid for construction of the new building, and $75,000 was paid for a parking lot and necessary walkways and driveways. Use the above information to answer questions 7 and 8 below.
____ 7. The new office building should be recorded at
a. $1,200,000.
b. $1,423,000.
c. $1,220,000.
d. $1,258,000.
____ 8. Land should be recorded at a cost of
a. $535,000.
b. $641,000.
c. $564,000.
d. $561,000.