Barton Resort incurred the following costs to acquire and prepare land during 2015 for a new parking lot: purchase price for land, $800,000; cost to clear the land, $30,000; cost of paving, $40,000; and lighting for the parking lot, $20,000.How much should Barton record in the Land Improvements account?

Question

Quizplus · Accepted Answer

Land improvements include costs incurred to make land more usable and increase its value. In this case, the cost of clearing the land, paving it, and installing lights all qualify as land improvements. The purchase price of the land itself is not considered a land improvement, as it is the cost of acquiring the land, not improving it. Therefore, Barton should record the total amount of $90,000 ($30,000 + $40,000 + $20,000) in the Land Improvements account.

Barton Resort Incurred the Following Costs to Acquire and Prepare