A company purchased land to be used as the site for the construction of a plant. Timber was cut from the building site so that construction of the plant could begin. The proceeds from the sale of the timber should be
A) classified as other income.
B) netted against the costs to clear the land and expensed as incurred.
C) deducted from the cost of the plant.
D) deducted from the cost of the land.

Question

Quizplus · Accepted Answer

The proceeds from the sale of the timber should be deducted from the cost of the land because they are considered a reduction in the cost of acquiring the land for its intended use.

A Company Purchased Land to Be Used as the Site