Question Details

Fences and parking lots are reported on the statement of financial position as 


1.	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 statement of financial position as 
a.	current assets.
b.	land improvements.
c.	land.
d.	property and equipment.

	5.	To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be
a.	allocated on the basis of lost production.
b.	eliminated completely from the cost of the asset.
c.	allocated on an opportunity cost basis.
d.	allocated on a pro rata basis between the asset and normal operations.




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