Aye Corp Purchases a Remote-Site Building for Computer Operations

question 1

Multiple Choice

Aye Corp. purchases a remote-site building for computer operations. The building will be suitable for operations after some necessary expenditures. The wiring must be replaced to handle the computer specifications. The roof is leaking and must be replaced. All rooms must be repainted and re-carpeted and there will also be some updating of the plumbing needed. Which of the following statements is true?

• A) The cost of the building will 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 replacement will be part of the computer costs, not the building cost.

---

Definitions:

Division 3

Pertaining to a specific categorization within a larger organization or system, often used in sports or hierarchical structuring.

Mixed Cost

A cost that contains both fixed and variable components, changing with the level of activity but not in direct proportion.

Variable Cost

Variable cost refers to expenses that change directly with the level of production or business activity, such as raw materials and labor costs.

Fixed Cost

Expenses that do not change with the level of production or sales activity, such as rent or salaries.