The company purchased the land & building. Now if the company wants to use only the land, all necessary costs incurred in making the land ready for its intended use will become part of the cost of land.
Work Step by Step
The cost will include the purchase piece, expenditure on clearing, draining, filling and grading. If the land has building on it that must be removed to make the site suitable for construction of new building the company includes the demolition and removal costs. If the company wants to use both the land & building, the purchase price will include purchase price plus the allied costs.