FMV of land capitalization relative to governmental activities

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  • #203406
    shawnl112
    Spectator

    Please explain

    In Year 1, Palm City acquired, through forfeiture as a result of nonpayment of property taxes, a parcel of land that the city intends to use as a parking lot for general governmental purposes. The total amount of taxes, liens, and other costs incurred by Palm incidental to acquiring ownership and perfecting title was $20,000. The land’s fair market value at the forfeiture date was $60,000. What amount should Palm City capitalized relative to its governmental activities?

    a. $20,000

    b. $60,000

    c. $0

    d. $80,000

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