Chester Corp. purchases and develops land to sell in its normal business operations. Its operating cycle is less than one year. In November of this year, it purchased land to develop and sell. The land was not sold as of December 31. How should this land be classified on Chester Corp.’s financial statements?It should be reported in an “Inventory” account in the PP&E section of the balance sheet.It should be reported in a “Land” account in the long-term (or PP&E) section of the balance sheet.It should be reported as part of the “Cost of Goods Sold” account on the income statement.It should be reported in an “Inventory” account in the current asset section of the balance sheet.

Inventory - Inventory is an assets that will be sold to any customer for a profit. Inventory will be…

Answered: Chester Corp. purchases and develops…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Chester Corp. purchases and develops land to sell in its normal business operations. Its operating cycle is less than one year. In November of this year, it purchased land to develop and sell. The land was not sold as of December 31. How should this land be classified on Chester Corp.’s financial statements?

It should be reported in an “Inventory” account in the PP&E section of the balance sheet.
It should be reported in a “Land” account in the long-term (or PP&E) section of the balance sheet.
It should be reported as part of the “Cost of Goods Sold” account on the income statement.
It should be reported in an “Inventory” account in the current asset section of the balance sheet.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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