Pearson eText Horngren's Financial & Managerial Accounting: The Financial Chapters -- Instant Access (Pearson+)
Pearson eText Horngren's Financial & Managerial Accounting: The Financial Chapters -- Instant Access (Pearson+)
7th Edition
ISBN: 9780136714194
Author: Tracie Miller-Nobles, Brenda Mattison
Publisher: PEARSON+
Question
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Chapter 9, Problem 1QC
To determine

Plant Assets: Plant assets are referred to the long-term and tangible assets that business use in its business operations. Plant assets are also popularly known as Property, Plant, and Equipment or simply the Fixed Assets.

To Identify: The cost that is not recorded as part of the cost of the building.

Expert Solution & Answer
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Answer to Problem 1QC

Annual building maintenance is the cost that is not recorded as part of the cost of the building. Hence, option d is correct.

Explanation of Solution

Explanations:

The expenses that are incurred to increase the efficiency of the building or increase the useful life of the building or make the building ready to use, would be considered as the cost of the building. On the other hand, expenses incurred to keep the building in good usable condition are referred to as maintenance cost that are treated as revenue expenditures.

In option a, b, and c the expenses incurred are to make the building ready for use, and therefore should be considered as cost of the building. But in option d, annual building maintenance is incurred to keep the building in good condition.

Conclusion
Therefore, the correct option is d.

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