Asked by Kiasha Trammell on Jun 27, 2024
Verified
Which one of the following items would be charged to the cost of land rather than the cost of the building?
A) Demolition of an existing structure.
B) Capitalization of interest.
C) Architectural fees.
D) Cost of the foundation.
Demolition
The process of tearing down or destroying a building or structure, usually in order to make way for new construction.
Capitalization
The accounting practice of recording a cost/expense as an asset on the balance sheet rather than expensing it immediately.
- Understand the costs included in the purchase and improvement of land and buildings.
Verified Answer
MF
Makaila Foster 'student'Jun 29, 2024
Final Answer :
A
Explanation :
Demolition costs of an existing structure on a piece of land are considered part of the land cost because they are necessary to prepare the land for its intended use. Costs directly associated with the construction of a building, such as architectural fees, foundation costs, and capitalized interest, are charged to the building's cost.
Learning Objectives
- Understand the costs included in the purchase and improvement of land and buildings.