Question

Pick ONE item below. Indicate where the following items would be shown on a balance sheet. a) Landscaping costs b) Attorney fees and recording fees related purchasing land c) A parking lot serving employees in the building d) Cost of temporary building for workers during construction building e) Variable overhead related to construction of machinery

Answer 1

Note : Some of the classification of items asked in question is a little controversial such as cost of temporary buildings etc. Students might have a different opinion in case of such matters, however the aforementioned views are the generally accepted views in the industry today.

Answer :

S. No.	Item	Where in Balance Sheet	Remarks
a)	Landscaping Costs	Land	Landscaping costs refer to cost that improves the visible features/living features of a land and are capitalized either with Land or as a separate asset.
b)	Attorney fees and recording fees related purchasing land	Land	Cost of land also includes any costs which have been incurred for acquiring it which is directly attributable to it including legal costs and purchase related expenses.
c)	A parking lot servicing employees in Building	Land Improvement	Construction of parking lot in a building is generally considered as a land improvement and recorded as a separate asset. These should also be depreciated.
d)	Cost of temporary building for workers during construction of building	Asset - Capitalized as Building improvement	Cost of temporary buildings used during or for the construction are treated as building improvements and capitalized accordingly.
e)	Variable overhead related to construction of machinery	Machinery	Variable Ohs are generally recorded/capitalized alongwith Machinery.