When land is purchased, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account.

Question

Quizplus · Accepted Answer

These costs are directly associated with preparing the land for its intended use, so they should be capitalized as part of the Land account, not Land Improvements. Land Improvements typically refer to betterments like fences, sidewalks, and driveways that are separate from the land itself.

When Land Is Purchased, the Costs for Clearing, Draining, Filling