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A real estate development company expends large sums to identify properties for future development. Should these...

A real estate development company expends large sums to identify properties for future development. Should these costs be expensed in the period incurred or capitalized into a development property asset account?
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The expenditure incurred in identification of properties for future development should be capitalised. All direct production costs inclusive of research and development of the property needs to be capitalized. These costs will not be expensed in the period they were incurred however recognized over a period of time. The real estate development company will capitalize the preliminary project phase which includes the costs of surveys, conceptual formulation of alternatives, and evaluating those of alternatives.

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