McLaren Corp.incurred the following costs to acquire and prepare land during 2017 for a new parking lot: purchase price for land,$800,000;cost of paving,$40,000;and lighting for the parking lot,$20,000.How much should McLaren record in the Land Improvements account?

Question

Quizplus · Accepted Answer

The Land Improvements account should only include costs that improve the land and have a finite life. The cost of paving and lighting for the parking lot meet these criteria and should be included in the Land Improvements account. Therefore, the total amount to be recorded in the Land Improvements account is $60,000. The purchase price for land is not recorded in the Land Improvements account, as it is considered part of the cost of the land itself.