When a Firm Buys Land on Which There Is a Building

question 36

Multiple Choice

When a firm buys land on which there is a building, and the building is torn down so that an appropriate new building can be constructed on the land:

• A)any of the purchase cost allocated to the old building is reported as a loss.
• B)the cost assigned to the land excludes the cost of the old building.
• C)the total cost of the land and old building are capitalized as land cost.
• D)any of the purchase cost allocated to the old building is capitalized as part of the cost of the new building.