When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant,the costs incurred to tear down the building should be
A) amortized over the estimated time period between the tearing down of the building and the completion of the plant.
B) expensed as incurred.
C) added to the cost of the plant.
D) added to the cost of the land.

Question

Quizplus · Accepted Answer

The costs incurred to tear down the building are considered part of the land preparation costs and should be capitalized as part of the land's cost. This is because the land is being prepared for its intended use, and these costs are necessary to get the land in the condition for its intended use.

When a Company Purchases Land with a Building on It