A Company Purchases a Remote Site Building for Computer Operations

question 172

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:

Par Value

A nominal value assigned to shares of stock by the issuing company, which has little relation to its market value.

Undervalued

A financial assessment that concludes an asset or a company's market price is lower than its intrinsic value.

Overvalued

Refers to a situation where the price of an asset exceeds its intrinsic value, often due to speculative demand.

Consolidated Equipment

Consolidated Equipment collectively refers to the physical assets reported on a consolidated financial statement, encompassing all subsidiaries and the parent company.