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 To explain: whether the tree cutting, land clearing, and grading costs of constructing the ski slopes should be debited to the land account.

Question

Indicate whether each of the following expenditures should be classified as land, land improvements, buildings, equipment, or none of these. 1. 2. Parking lots Electricity used by a machine 3. Excavation costs 4. Interest on building construction loan 5. Cost of trial runs for machinery 6. Drainage costs 7. Cost to install a machine 8. Fences 9. Unpaid (past) property taxes assumed 10. Cost of tearing down a building when land and a building on it are purchased

Answer 1

Question

Chapter 9, Problem 9.2EX

(A)

To determine

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

To explain: whether the tree cutting, land clearing, and grading costs of constructing the ski slopes should be debited to the land account.

(B)

To determine

To explain: whether such costs debited to land account should be depreciated.

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