Indicate whether each of the following expenditures should be classified as land
ID: 2449801 • Letter: I
Question
Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X).
____ 1. Computer installation cost ____ 6. Freight on computer purchased
___ 2. Driveway cost ____ 7. Architect’s fee
____ 3. Surveying costs ____ 8. Utility cost during first year
____ 4. Material costs incurred to construct factory
____ 5. Cost of tearing down a warehouse on land just purchased
Explanation / Answer
1) Computer installation cost = Equipment , cost upto installation are capitalised
2) Driveway cost - land improvement
4) Surveying cost- land done with regard to land
5) Cost of teraing down a warehouse in land just purchased - Land
6) Freight on computer purchased - Equipment
7) Archtect's fees - Building since it will be related to building
8) Utility cost during the first year - None of these