Question Details

Historical cost is the basis advocated for recording the acquisition 



	The cost of land typically includes the purchase price and all of the following costs except
a.	grading, filling, draining, and clearing costs.
b.	street lights, sewers, and drainage systems cost.
c.	private driveways and parking lots.
d.	assumption of any liens or mortgages on the property.

	2.	If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on
a.	the significance of the cost allocated to the building in relation to the combined cost of the lot and building.
b.	the length of time for which the building was held prior to its demolition.
c.	the contemplated future use of the parking lot.
d.	the intention of management for the property when the building was acquired.

3.	The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to
a.	the machinery account.
b.	a separate deferred charge account.
c.	miscellaneous tax expense (which includes all taxes other than those on income).
d.	accumulated depreciation--machinery.
	4.	Fences and parking lots are reported on the balance sheet as
a.	current assets.
b.	land improvements.
c.	land.
d.	property and equipment.

	5.	Historical cost is the basis advocated for recording the acquisition of property, plant, and equipment for all of the following reasons except
a.	at the date of acquisition, cost reflects fair market value.
b.	property, plant, and equipment items are always acquired at their original historical cost.
c.	historical cost involves actual trans¬actions and, as such, is the most reliable basis.
d.	gains and losses should not be anticipated but should be recognized when the asset is sold.





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