Shenandoah Skies bought land to be used for a new ski resort.Which of the following costs should not be capitalized?
A)$5,000,000 to purchase the land.
B)$5,000 paid to Jack Mogul for a title search.
C)$50,000 paid to cut down timber to make way for ski runs
D)$7,500 paid for a party to celebrate the grand opening.

Question

Quizplus · Accepted Answer

The general rule for tangible assets under the cost principle is that all reasonable and necessary costs to acquire and prepare an asset for use should be recorded as a cost of the asset.The costs of the party does not fit the criteria.

Shenandoah Skies Bought Land to Be Used for a New