Mclaren Corp incurred the following costs to acquire and prepare land during 2016 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 Halifax record in the Land Improvements account?

Question

Quizplus · Accepted Answer

Land improvements are costs incurred to make land ready for its intended use, and they include costs such as clearing, grading, filling, and paving. In this case, the costs of clearing, paving, and lighting the land are all considered land improvements, and should be recorded in the Land Improvements account. The purchase price for the land itself is not recorded in the Land Improvements account, as it is considered a separate asset. Therefore, the total amount to be recorded in the Land Improvements account is $30,000 + $40,000 + $20,000 = $60,000.

Mclaren Corp Incurred the Following Costs to Acquire and Prepare