The Following Costs Were Incurred to Acquire and Prepare Land

question 85

Multiple Choice

The following costs were incurred to acquire and prepare land for a new parking lot: purchase price for land, cost to clear the land, cost of paving, cost of lighting for the parking lot, and cost of landscaping for the parking lot. How should the company determine which costs should be recorded as Land Improvements and which costs should be recorded as Land?

• A)The costs with an unlimited life are debited to Land, and the costs with a limited useful life are debited to Land Improvements.
• B)The costs with a limited life are debited to Land, and the costs with an unlimited useful life are debited to Land Improvements.
• C)The costs to be depreciated are debited to Land, and the costs that will not be depreciated are debited to Land Improvements
• D)Costs that are depreciable are debited to Land Improvements, while other costs are expensed immediately because of a lack of definite life.

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Definitions:

Reflective Listening

A communication technique in which the listener repeats back what they hear to the speaker, to confirm understanding of both content and feelings.

Durable Power

A legal document that grants someone the authority to act on another person's behalf in legal and financial matters, continuing even if the principal becomes incapacitated.

General Power

The authority granted to an individual or body to make all necessary decisions in managing an entity's affairs within its objectives and purposes.

Negligently Dropped

A term referring to carelessly losing or letting go of something, potentially leading to liability if it causes harm or loss.