Calculating the Total Cost of Acquisition for Falcon Waste Management

Question:

What is the total cost of the acquisition for Falcon Waste Management, considering the purchase of land and a warehouse along with relevant expenditures?

Answer:

The total cost of acquisition for Falcon Waste Management to acquire the land and warehouse is $651,000. This includes the purchase price and additional expenditures related to the acquisition, such as the broker's commission, title insurance, and miscellaneous closing costs. The correct answer is option 2).

Explanation:

Falcon Waste Management's total cost of acquisition for the land and warehouse will include the purchase price plus all additional expenses related to the acquisition. These expenses include the broker's commission, title insurance, and miscellaneous closing costs. Therefore, the total cost will be calculated by adding the purchase price of $610,000 with the broker's commission of $31,000, title insurance of $3,500, and miscellaneous closing costs of $6,500.

When you add up all these costs, the total acquisition cost is $651,000 (610,000 + 31,000 + 3,500 + 6,500).