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Bridger Ski Co. has developed a tract of land into a ski resort. The company has cut the trees, cleared and graded the land and hills, and constructed ski lifts. (a) Should the tree cutting, land clearing, and grading costs of constructing the ski slopes be debited to the land account? (b) If such costs are debited to Land, should they be depreciated? Explain.
Financial Accounting
Solutions
Financial Accounting
Bridger Ski Co. has developed a tract of land into a ski resort. The company has cut the trees, cleared and graded the land and hills, and constructed ski lifts.
(a) Should the tree cutting, land clearing, and grading costs of constructing the ski slopes be debited to the land account? (b) If such costs are debited to Land, should they be depreciated? Explain.
(a)
Explain whether the tree cutting, land clearing, and grading costs of constructing the ski slopes should be debited to the land account.
Explanation of Solution
Cost of Land: The cost of land includes the following costs:
- Purchase price of land
- Attorney fees
- Real estate agent commission
- Title
- Recording fees
- Additional expenses :
- Clearing
- Filling and leveling of land
- Removing of old buildings
The cost of acqu...
(b)
Explain whether such costs debited to land account should be depreciated.
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