I don't know how you expect us to advise on the a/c. There isn't a good enough pic to even tell if the compressor is there. Is the compressor seized? Does it have a York compressor? R12? You can spend up to a couple grand on that system, or buy a belt and be good to go. About the only two reasons to have to cut the belt is a failed clutch bearing or seized compressor.
How does the hp measure up? It should be about 105 PTO hp. Does it? How can anyone here tell you that? Make sure the hydraulics, brakes, PTO, steering and T/A all work at operating temperature.
Make sure the steering isn't too sloppy and the steering arms are tight on the spindles.
Hours are suspect for a 40 year old tractor. My dad bought a new 986 in 1979. I still blame it for my back troubles.