Fullerton Waste Management Land and Warehouse Acquisition Analysis
Cost Basis Calculation for Fullerton Waste Management
Fullerton Waste Management purchased a piece of land and warehouse for $720,000. Along with the purchase price, the company also incurred the following expenses related to the acquisition: broker's commission of $42,000 and title insurance of $2,000. Assuming that Fullerton decides to use the warehouse rather than demolish it, let's calculate the total cost basis for the acquisition.
Calculation:
1. Purchase Price: $720,000
2. Broker's Commission: $42,000
3. Title Insurance: $2,000
Final Answer:
The total cost basis for Fullerton Waste Management is $764,000 ($720,000 + $42,000 + $2,000).
Explanation:
When Fullerton Waste Management purchased the land and warehouse for $720,000, they also made expenditures related to the acquisition, including a broker's commission of $42,000 and title insurance of $2,000. To find the total cost basis, we need to add all of these expenditures to the purchase price of the land and warehouse:
Total Cost Basis = Purchase Price + Broker's Commission + Title Insurance
Total Cost Basis = $720,000 + $42,000 + $2,000
Total Cost Basis = $764,000
Therefore, the total cost basis for Fullerton Waste Management is $764,000. This amount will be important for the company in determining future gains or losses on the property, especially if they decide to sell or make improvements to the warehouse.
What is the total cost basis for Fullerton Waste Management's land and warehouse acquisition? The total cost basis for Fullerton Waste Management's land and warehouse acquisition is $764,000.