ndicate whether each of the following statements is true or false. When land with an old building is purchased as a future building site, the cost of removing the old building is part of the cost of the new building. Answer Special assessments for local improvements such as streetlights and sewers should be accounted for as land improvements. Answer Avoidable interest is the amount of interest cost that a company could theoretically avoid if it had not made expenditures for the asset.

ndicate whether each of the following statements is true or false. When land with an old building is purchased as a future building site, the cost of removing the old building is part of the cost of the new building. Answer Special assessments for local improvements such as streetlights and sewers should be accounted for as land improvements. Answer Avoidable interest is the amount of interest cost that a company could theoretically avoid if it had not made expenditures for the asset.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter12: Nonrecognition Transactions

Section: Chapter Questions

Problem 27P

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Which of the following is least likely capitalized as cost of land? Grading, filling, draining clearing and similar site development activities Survey Landscaping and similar improvements that have limited useful lives. Special assessment Subsequent to initial recognition, an entity shall use this model to account for its items of property, plant and equipment. cost model revaluation model fair value model Cost model or revaluation model as an accounting policy choice It is the systematic allocation of the depreciable amount of an asset over its estimated useful life. Depreciation Impairment Revaluation all of these
Under IFRS, what cost is specifically excluded from being capitalized as part of the cost of an investment property? Question 7 options: a) Delivery of materials needed for construction of an investment property. b) Standard wasted material costs incurred in the construction of an investment property. c) Losses incurred after construction is complete and before the property is fully occupied. d) Replacement of a key component of the investment property with more environmentally friendly parts.
Which costs would most likely be capitalized in the “Land Improvements” account? Costs associated with clearing the land for its intended business use Costs associated with paving and fencing on the land Costs associated with constructing a building on the land
Indicate where the following items would be shown on abalance sheet.(a) A lien that was attached to the land when purchased.(b) Landscaping costs.(c) Attorney’s fees and recording fees related to purchasingland.(d) Variable overhead related to construction of machinery.(e) A parking lot servicing employees in the building.(f) Cost of temporary building for workers during constructionof building.(g) Interest expense on bonds payable incurred duringconstruction of a building.(h) Assessments for sidewalks that are maintained bythe city.(i) The cost of demolishing an old building that was onthe land when purchased.
When a company purchases land with a building on it and immediately tears down thebuilding so that the land can be used for the construction of a plant, the costs incurredto tear down the building should be:a. expensed as incurredb. added to the cost of the plantc. added to the cost of the landd. amortized over the estimated time period between the tearing down of thebuilding and the completion of the plan
2. If a corporation purchases land and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on A) the intention of management for the property when the building was acquired. B) the significance of the cost allocated to the building in relation to the combined cost of the land and building. C) the length of time for which the building was held prior to its demolition. D) the contemplated future use of the parking lot.
When an entity acquires land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant, the cost incurred to tear down the building shall be a. Expensed as incurred b. Amortized over the estimated time period between the tearing down of the building and the completion of the plant c. Added to the cost of the building d. Added to the cost of the land
When an entity purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant, the cost incurred to tear down the building shall be Expensed as incurred Amortized over the estimated time period between the tearing down of the building and the completion of the plant Added to the cost of the land Added to the cost of the plant
Smatter Corporation purchased land for a new building. Which of the following costswould not be included in the cost of the land?a. Purchase price of the landb. Cost of demolishing an old garage located on the landc. Cost of a new parking lot constructed on the landd. Brokerage commission paid to the real estate agent who handled the land transaction
All of the following costs associated with acquiring a building should be capitalized except a. The costs of buildings permits b. The cost of a strike associated with the construction of the building c. the contract price d. the costs of excavation for the building
Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X). _____ 1. Parking lots _____ 2. Electricity used by a machine _____ 3. Interest on building construction loan _____ 4. Cost of trial runs for machinery _____ 5. Drainage costs _____ 6. Cost to install a machine _____ 7. Fences _____ 8. Unpaid (past) property taxes assumed _____ 9. Cost of tearing down a building when land and a building on it are purchased
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