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.

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Definitions:

Revenues

Represent the total amount of income generated by the sale of goods or services related to a company's primary operations.

Asset Accounts

Accounts that represent the resources owned by a business, which are expected to provide future benefits.

Accounts Receivable

Financial obligations of clients or customers to a company for received goods or services that have yet to be settled.

Fixed Assets

Fixed assets are long-term tangible assets that a company owns and uses in its operations to generate income, such as buildings, machinery, and equipment.