A Company Purchases a Remote Site Building for Computer Operations

question 76

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 re-carpeted 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 re-carpeting 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:

Asset

Resources owned or controlled by a company, expected to provide future economic value or benefits.

Owner's Capital

The amount of money and other assets owned by a business's owner after all liabilities have been deducted; also known as owner's equity.

Accounts Receivable

Amounts due from clients to a business for goods or services that have been supplied or rendered but haven't been settled.

Accounts Payable

Amounts owed by a company to suppliers or creditors for goods and services received but not yet paid for.