The costs of land improvements with limited lives, such as a parking lot, are
A) added to the land account.
B) recorded in a separate account.
C) depreciated over their useful lives.
D) recorded in a separate account and depreciated over their useful lives.

Question

Quizplus · Accepted Answer

Land improvements with limited lives, such as a parking lot, are recorded in a separate account and depreciated over their useful lives. This is because these improvements provide benefits only for a limited period, and therefore their costs should be allocated over that period. However, the land itself has an indefinite life and is not subject to depreciation. Therefore, the costs of land improvements should be recorded separately from the land account and recognized as an expense over the useful life of the improvement through depreciation.

The Costs of Land Improvements with Limited Lives, Such as a Parking