Morris recently purchased a building and the tract of land on which it is located. Morris plans to raze the building immediately and to erect a new building on the site. The appraised value of the original building should be

Question

Quizplus · Accepted Answer

When a building is purchased with the intention of demolishing it to clear the land for a new structure, the cost of the original building (including demolition costs) is added to the land's cost. This is because the land is considered a permanent asset, and the cost of clearing it for its intended use is part of its acquisition cost.

Morris Recently Purchased a Building and the Tract of Land