In December 2021, Ami, the Owner of Elm, Paid for a Parcel

question 93

Multiple Choice

In December 2021, Ami, the owner of Elm, paid for a parcel of land along with a warehouse on behalf of Elm, the registered owner of the property, for a total cost of $700,000. Ami also paid a real estate commission of $35,000 and legal fees of $5,000 in connection with this purchase, plus $25,000 for the demolition of the warehouse. Elm will reimburse Ami for these costs in January 2021 and will begin construction of an office building on this land. Prior to the purchase, the land and warehouse were appraised at $500,000 and $200,000, respectively. How much should be capitalized to the value of the land in 2021?

• A)$0
• B)$505,000
• C)$730,000
• D)$765,000

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Definitions:

Industrial-Organizational Psychology

The branch of psychology that applies psychological theories and principles to organizations and the workplace to optimize human behavior in work environments.

Job Applicants

Individuals who apply for a position of employment, seeking to fulfill the requirements and responsibilities of a job.

Manufacturing Firm

A business entity that produces goods using raw materials and machinery in a systematic process.

Social Psychologist

A scientist who studies how people's thoughts, feelings, and behaviors are influenced by the actual, imagined, or implied presence of others.