Wesley Hospital installs a new parking lot. The paving cost $40000 and the lights to illuminate the new parking area cost $25000. Which of the following statements is true with respect to these additions?

Question

Quizplus · Accepted Answer

The cost of paving the parking lot should be capitalized to the Land Improvements account, as it is a permanent addition to the land. The cost of the lights should also be capitalized to the Land Improvements account, as it is providing a benefit to the newly added parking lot. Therefore, the total cost ($40000 + $25000 = $65000) should be debited to the Land Improvements account.

Wesley Hospital Installs a New Parking Lot