Smatter Corporation purchased land for a new building. Which of the following costs would not be included in the cost of the land? a. Purchase price of the land b. Cost of demolishing an old garage located on the land c. Cost of a new parking lot constructed on the lane d. Brokerage commission paid to the real estate agent who handled the land transaction

Question

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Answer 1

Textbook Question

Chapter 7, Problem 1QC

Smatter Corporation purchased land for a new building. Which of the following costs would not be included in the cost of the land?

a. Purchase price of the land

b. Cost of demolishing an old garage located on the land

c. Cost of a new parking lot constructed on the lane

d. Brokerage commission paid to the real estate agent who handled the land transaction

Expert Solution & Answer

To determine

The costs which would not be included in the cost of the land.

Answer to Problem 1QC

The costs which would not be included in the cost of the land is option c. Cost of a new parking lot constructed on the land.

Explanation of Solution

Plant assets:

Plant assets refer to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

Justification for incorrect answers:

Cost of land:

The amounts that should be recorded as a cost of a land are the total amount of expenditure that are incurred to acquire the land and to make it ready for use. The cost of land and building includes the following costs:

Purchase price of land
Demolishment cost of the old building on the land
Attorney fees
Real estate agent commission
Title
Recording fees
Legal fees
Additional expenses :
- Clearing
- Filling and leveling of land

Option a, b, and d:

The purchase price of the land, cost of demolishing an old garage located on the land, and brokerage commission paid to the real estate agent who handled the land transaction are the costs that would be included in the cost of the land. Hence, the options a, b and d are the incorrect answers.

Justification for the correct answer:

As the cost of a new parking lot constructed on the land is not the expenditure which is incurred to acquire the land and to make it ready for use, it would not be included in the cost of the land.

Therefore, option c. is the correct answer.

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01:46

Students have asked these similar questions

Smatter Corporation purchased land for a new building. Which of the following costs would not be included in the cost of the land? a. Purchase price of the land b. Cost of demolishing an old garage located on the land c. Cost of a new parking lot constructed on the lane d. Brokerage commission paid to the real estate agent who handled the land transaction

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

Merchant Company purchased property for a building site. The costs associated with the property were: Purchase price Real estate commissions Legal fees Expenses of clearing the land Expenses to remove old building What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building? Multiple Choice $181,300 to Land; $20,800 to Building. $196,800 to Land; $1,500 to Building. $195,500 to Land; $5,300 to Building. $199,300 to Land; $0 to Building. $ 180,000 15,500 1,300 2,500 1,500 $200,800 to Land; $0 to Building.

Answer 2

Textbook Question

Chapter 7, Problem 1QC

Smatter Corporation purchased land for a new building. Which of the following costs would not be included in the cost of the land?

a. Purchase price of the land

b. Cost of demolishing an old garage located on the land

c. Cost of a new parking lot constructed on the lane

d. Brokerage commission paid to the real estate agent who handled the land transaction

Expert Solution & Answer

To determine

The costs which would not be included in the cost of the land.

Answer to Problem 1QC

The costs which would not be included in the cost of the land is option c. Cost of a new parking lot constructed on the land.

Explanation of Solution

Plant assets:

Plant assets refer to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

Justification for incorrect answers:

Cost of land:

The amounts that should be recorded as a cost of a land are the total amount of expenditure that are incurred to acquire the land and to make it ready for use. The cost of land and building includes the following costs:

Purchase price of land
Demolishment cost of the old building on the land
Attorney fees
Real estate agent commission
Title
Recording fees
Legal fees
Additional expenses :
- Clearing
- Filling and leveling of land

Option a, b, and d:

The purchase price of the land, cost of demolishing an old garage located on the land, and brokerage commission paid to the real estate agent who handled the land transaction are the costs that would be included in the cost of the land. Hence, the options a, b and d are the incorrect answers.

Justification for the correct answer:

As the cost of a new parking lot constructed on the land is not the expenditure which is incurred to acquire the land and to make it ready for use, it would not be included in the cost of the land.

Therefore, option c. is the correct answer.

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01:46

Answer 3

Textbook Question

Chapter 7, Problem 1QC

Smatter Corporation purchased land for a new building. Which of the following costs would not be included in the cost of the land?

a. Purchase price of the land

b. Cost of demolishing an old garage located on the land

c. Cost of a new parking lot constructed on the lane

d. Brokerage commission paid to the real estate agent who handled the land transaction

Expert Solution & Answer

To determine

The costs which would not be included in the cost of the land.

Answer to Problem 1QC

The costs which would not be included in the cost of the land is option c. Cost of a new parking lot constructed on the land.

Explanation of Solution

Plant assets:

Plant assets refer to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

Justification for incorrect answers:

Cost of land:

The amounts that should be recorded as a cost of a land are the total amount of expenditure that are incurred to acquire the land and to make it ready for use. The cost of land and building includes the following costs:

Purchase price of land
Demolishment cost of the old building on the land
Attorney fees
Real estate agent commission
Title
Recording fees
Legal fees
Additional expenses :
- Clearing
- Filling and leveling of land

Option a, b, and d:

The purchase price of the land, cost of demolishing an old garage located on the land, and brokerage commission paid to the real estate agent who handled the land transaction are the costs that would be included in the cost of the land. Hence, the options a, b and d are the incorrect answers.

Justification for the correct answer:

As the cost of a new parking lot constructed on the land is not the expenditure which is incurred to acquire the land and to make it ready for use, it would not be included in the cost of the land.

Therefore, option c. is the correct answer.

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Answer 4

Textbook Question

Chapter 7, Problem 1QC

Smatter Corporation purchased land for a new building. Which of the following costs would not be included in the cost of the land?

a. Purchase price of the land

b. Cost of demolishing an old garage located on the land

c. Cost of a new parking lot constructed on the lane

d. Brokerage commission paid to the real estate agent who handled the land transaction

Expert Solution & Answer

To determine

The costs which would not be included in the cost of the land.

Answer to Problem 1QC

The costs which would not be included in the cost of the land is option c. Cost of a new parking lot constructed on the land.

Explanation of Solution

Plant assets:

Plant assets refer to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

Justification for incorrect answers:

Cost of land:

The amounts that should be recorded as a cost of a land are the total amount of expenditure that are incurred to acquire the land and to make it ready for use. The cost of land and building includes the following costs:

Purchase price of land
Demolishment cost of the old building on the land
Attorney fees
Real estate agent commission
Title
Recording fees
Legal fees
Additional expenses :
- Clearing
- Filling and leveling of land

Option a, b, and d:

The purchase price of the land, cost of demolishing an old garage located on the land, and brokerage commission paid to the real estate agent who handled the land transaction are the costs that would be included in the cost of the land. Hence, the options a, b and d are the incorrect answers.

Justification for the correct answer:

As the cost of a new parking lot constructed on the land is not the expenditure which is incurred to acquire the land and to make it ready for use, it would not be included in the cost of the land.

Therefore, option c. is the correct answer.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

The costs which would not be included in the cost of the land.

Answer to Problem 1QC

The costs which would not be included in the cost of the land is option c. Cost of a new parking lot constructed on the land.

Explanation of Solution

Plant assets:

Plant assets refer to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

Justification for incorrect answers:

Cost of land:

The amounts that should be recorded as a cost of a land are the total amount of expenditure that are incurred to acquire the land and to make it ready for use. The cost of land and building includes the following costs:

Purchase price of land
Demolishment cost of the old building on the land
Attorney fees
Real estate agent commission
Title
Recording fees
Legal fees
Additional expenses :
- Clearing
- Filling and leveling of land

Option a, b, and d:

The purchase price of the land, cost of demolishing an old garage located on the land, and brokerage commission paid to the real estate agent who handled the land transaction are the costs that would be included in the cost of the land. Hence, the options a, b and d are the incorrect answers.

Justification for the correct answer:

As the cost of a new parking lot constructed on the land is not the expenditure which is incurred to acquire the land and to make it ready for use, it would not be included in the cost of the land.

Therefore, option c. is the correct answer.

Answer 8

Expert Solution & Answer

To determine

The costs which would not be included in the cost of the land.

Answer to Problem 1QC

The costs which would not be included in the cost of the land is option c. Cost of a new parking lot constructed on the land.

Explanation of Solution

Plant assets:

Plant assets refer to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

Justification for incorrect answers:

Cost of land:

The amounts that should be recorded as a cost of a land are the total amount of expenditure that are incurred to acquire the land and to make it ready for use. The cost of land and building includes the following costs:

Purchase price of land
Demolishment cost of the old building on the land
Attorney fees
Real estate agent commission
Title
Recording fees
Legal fees
Additional expenses :
- Clearing
- Filling and leveling of land

Option a, b, and d:

The purchase price of the land, cost of demolishing an old garage located on the land, and brokerage commission paid to the real estate agent who handled the land transaction are the costs that would be included in the cost of the land. Hence, the options a, b and d are the incorrect answers.

Justification for the correct answer:

As the cost of a new parking lot constructed on the land is not the expenditure which is incurred to acquire the land and to make it ready for use, it would not be included in the cost of the land.

Therefore, option c. is the correct answer.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

The costs which would not be included in the cost of the land.

Answer 12

Answer to Problem 1QC

The costs which would not be included in the cost of the land is option c. Cost of a new parking lot constructed on the land.

Answer 13

Explanation of Solution

Plant assets:

Plant assets refer to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.

Justification for incorrect answers:

Cost of land:

The amounts that should be recorded as a cost of a land are the total amount of expenditure that are incurred to acquire the land and to make it ready for use. The cost of land and building includes the following costs:

Purchase price of land
Demolishment cost of the old building on the land
Attorney fees
Real estate agent commission
Title
Recording fees
Legal fees
Additional expenses :
- Clearing
- Filling and leveling of land

Option a, b, and d:

The purchase price of the land, cost of demolishing an old garage located on the land, and brokerage commission paid to the real estate agent who handled the land transaction are the costs that would be included in the cost of the land. Hence, the options a, b and d are the incorrect answers.

Justification for the correct answer:

As the cost of a new parking lot constructed on the land is not the expenditure which is incurred to acquire the land and to make it ready for use, it would not be included in the cost of the land.

Therefore, option c. is the correct answer.

Answer 14

Ch. 7 - Smatter Corporation purchased land for a new...Ch. 7 - Carlos Company purchased a building and land for...Ch. 7 - Whitmore Corporation purchased a new delivery van...Ch. 7 - When a company expenses the cost of maintenance...Ch. 7 - Prob. 5QC Ch. 7 - Planter Company purchased a delivery van for...Ch. 7 - Bixby Corporation purchased a forklift for 40,000...Ch. 7 - On the first day of its fiscal year, Spearhead...Ch. 7 - The depreciation method that does not initially...Ch. 7 - Sokolsky Excavating purchased a used dump truck...

Answer to Problem 1QC

Explanation of Solution

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