A corporation issued debt to purchase 10 acres of land for development purposes. The expenses associated with
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A corporation issued debt to purchase 10 acres of land for development purposes. The expenses associated with this purchase are as follows:
Description Amount
Purchase price $1,000,000
Real estate tax arrears 15,000
Debt issuance costs 2,000
Attorney's fees—title search on the land 5,000
Required
1. What amount will the business must record in its financial statements for the acquisition of the land?
2. Why is the cost of debt issuance not included in the purchase of land?
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