BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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CAPITALIZED AS COST OF THE LAND
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CAPITALIZED AS COST OF THE NEW BUILDING
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EXPENSED IMMEDIATELY
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CHARGED TO RETAINIED EARNINGS
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Detailed explanation-1: -The cost of demolishing an old building preparatory to the construction of a new building in that place is to be treated as capital expenditure.
Detailed explanation-2: -The associated costs of building acquisition to be capitalized that should be included in the original cost of land include, but are not limited to: Original contract or purchase price. Brokers’ commissions. Closing fees, such as title search, and legal fees.
Detailed explanation-3: -Non-Capitalizable Costs Projects should expense and not capitalize any costs which do not improve or enhance the functionality of an asset or extend the useful life of an asset. Examples of these costs include, but are not limited to: Opening/completion parties. Student or employee morale (trips, gifts, or parties)
Detailed explanation-4: -Any renovation that increases the value and/or useful life, or new installation to a building, where the total of all expenditures (materials, labor, and all costs to complete the project) meets the building threshold of $100, 000.00 should be capitalized.