During Year 4, a firm purchased land, building, and equipment for a lump sum payment of $450,000. In connection with this acquisition, the firm also incurred legal fees of $5,000, accounting fees of $5,000, real estate transfer taxes on the building of $10,000, building inspection fee of $2,000, and appraisal costs of $10,000. The appraisal established the value of the land at $100,000, the value of the building at $300,000, and the value of the equipment at $100,000. All the costs have been accumulated in a temporary account titled "Site Acquisition Costs."
Prepare the journal entry to record the acquisition of the property and the related fees.
The lumpsum cost would be the cash paid plus legal fee, accounting fee and appraisal cost.
The lump sum costs will be 450,000+5,000+5,000+10,000= 470,000.
The building costs would be added to building (real estate transfer fee on ...
The solution explains the journal entry for acquisition of the property and the related fees