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

General Accounting question

Wilson Corporation acquires Greatbatch Company for $80 million cash in a merger. The balance sheets of both companies at the date of acquisition are as follows: Balance Sheet (in millions) Wilson Greatbatch Current assets $96 $8 Property and equipment 800 144 Intangibles 32 4.8 Total assets $928 $156.8 Current liabilities $40 $3.2 Long-term debt 640 104 Capital stock 80 19.2 Retained earnings 192 24 Accumulated other comprehensive income (loss) (24) 6.4 Total liabilities and equity $928 $156.8 Greatbatch's property and equipment is overvalued by $48 million, its reported intangibles are undervalued by $32 million, and it has unreported intangibles, in the form of customer databases and marketing agreements, valued at $11.2 million. Required Prepare Wilson's balance sheet immediately following the merger. Use a negative sign with your answer for AOCI if the balance is a loss.

Not use ai solution given correct answer

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

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Answer to Problem 1QC

Explanation of Solution

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