Fisher Apartments Purchased an Apartment Building to Rent to University

question 85

Multiple Choice

Fisher Apartments purchased an apartment building to rent to university students on December 15, 2011. The tenants moved in on January 1, 2012. On Super Bowl Sunday, a student punched a hole in the wall when his favorite team fumbled the ball. It cost the landlord $400 to repair the hole. How should this cost be recorded?

• A) It should be recorded as part of the asset account.
• B) It should be recorded as repair and maintenance expense.
• C) It should not be recorded as the tenants will be charged for the damage.
• D) It should not be recorded since this is an immaterial amount to the landlord.

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Definitions:

Means-tested

Pertaining to government programs that require individuals to meet certain income or asset criteria to qualify for benefits.

State Sales Tax

A tax imposed by a state on the sale of goods and services, typically calculated as a percentage of the selling price.

Inheritance Tax

A tax imposed on individuals who inherit assets from a deceased person.

Deficits

The amount by which a government, company, or individual's spending exceeds its income over a particular period of time.