Wesley Hospital installs a new parking lot. The paving cost $30,000 and the lights to illuminate the new parking area cost $15,000. Which of the following statements is true with respect to these additions?

Question

Quizplus · Accepted Answer

Land improvements include additions to land such as parking lots, sidewalks, fencing, landscaping, and so on. Therefore, the cost of paving the new parking lot ($30,000) and the lights to illuminate the new parking area ($15,000) should be debited to the Land Improvements account. The Land account is used to record the purchase price of the land when it was acquired, and does not include any additions or improvements that are made to the land.

Wesley Hospital Installs a New Parking Lot