McArthur Company plans to develop a shopping center.In the first quarter,the following amounts were spent: $$\begin{array} { | l | r | }
\hline \text { Acquisition of land } & \$ 21,000 \
\hline \text { Surveys and legal fees } & 1500 \
\hline \text { Land clearing } & 1000 \
\hline \text { Fencing } & 6000 \
\hline \text { Install lighting and signage } & 16,060 \
\hline
\end{array}$$ What amount should be recorded as the land improvements cost?

Question

McArthur Company plans to develop a shopping center.In the first quarter,the following amounts were spent: $$\begin{array} { | l | r | } 
\hline \text { Acquisition of land } & \$ 21,000 \
\hline \text { Surveys and legal fees } & 1500 \
\hline \text { Land clearing } & 1000 \
\hline \text { Fencing } & 6000 \
\hline \text { Install lighting and signage } & 16,060 \
\hline
\end{array}$$ What amount should be recorded as the land improvements cost?

Quizplus · Accepted Answer

Land improvements cost includes any expenses incurred to make the land ready for its intended use. Since McArthur Company is planning to develop a shopping center, the cost of site preparation, grading, filling, and landscaping will be included in the land improvements cost. Therefore, the total amount spent in the first quarter ($22,060) should be recorded as the land improvements cost. Options A, B, and D are incorrect as they do not reflect the true cost of land improvements.

McArthur Company Plans to Develop a Shopping Center What Amount Should Be Recorded as the Land Improvements Cost