A Company Purchases a Remote Site Building for Computer Operations

question 101

Multiple Choice

A company purchases a remote site building for computer operations. The building will be suitable for operations after some expenditures. The wiring must be replaced to computer specifications. The roof is leaky and must be replaced. All rooms must be repainted and recarpeted and there will also be some plumbing work done. Which of the following statements is true?

• A) The cost of the building will not include the repainting and recarpeting costs.
• B) The cost of the building will include the cost of replacing the roof.
• C) The cost of the building is the purchase price of the building while the additional expenditures are all capitalized as Building Improvements.
• D) The wiring is part of the computer costs not the building cost.

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Definitions:

Market Prices

The current price at which an asset or service can be bought or sold in the marketplace, determined by the forces of supply and demand.

Property Rights

Legal rights to possess, use, and dispose of assets.

Market Prices

The current price at which goods and services can be bought or sold in a market, determined by supply and demand.

Mutually Agreeable Prices

Prices that are accepted by both buyers and sellers in a transaction, usually determined through negotiation or market dynamics.