Hacienda Realty,a real estate management company,buys land that contains an abandoned apartment building for $9,000,000.It pays a construction company $1,000,000 to demolish the apartment building.Which of the following is correct?

Question

Quizplus · Accepted Answer

Cost of land = $9,000,000 + $1,000,000 = $10,000,000
If a company buys land and incurs demolition costs before the land can be used,these additional costs would be capitalized as a cost of the land.

Hacienda Realty,a Real Estate Management Company,buys Land That Contains an Abandoned