Acer Investments plans to develop a shopping center. In the first quarter, they spent the following amounts: $$\begin{array} { | l | r | }
\hline \text { acquisition of land } & \$ 15,000 \
\hline \text { Surveys and legal fees } & 600 \
\hline \text { Land clearing } & 200 \
\hline \text { Fencing } & 1,000 \
\hline \text { Install lighting and signage } & 860 \
\hline
\end{array}$$ What amount should be recorded as the cost of land in the books of the company?

Question

Acer Investments plans to develop a shopping center. In the first quarter, they spent the following amounts: $$\begin{array} { | l | r | } 
\hline \text { acquisition of land } & \$ 15,000 \
\hline \text { Surveys and legal fees } & 600 \
\hline \text { Land clearing } & 200 \
\hline \text { Fencing } & 1,000 \
\hline \text { Install lighting and signage } & 860 \
\hline
\end{array}$$ What amount should be recorded as the cost of land in the books of the company?

Quizplus · Accepted Answer

The cost of land includes only the acquisition cost, which is $15,000. The other expenses such as surveys, legal fees, land clearing, fencing, lighting, and signage are considered as land improvements and should be recorded separately. Therefore, the cost of land is $15,000.

Acer Investments Plans to Develop a Shopping Center What Amount Should Be Recorded as the Cost of Land