Question

Question 3 Not yet answered If a real estate company expends $100,000 to survey or study a parcel of land to acquire for development and sale to third parties and it is determined that the property will not be acquired, what happens to the $100,000 spent? Points out of 2.00 P Flag question Select one: O a. The $100,000 is charged to expense when there is enough profit to absorb it. b. The $100,000 is charged to expense as soon as it is determined the property will not be purchased. o C. The $100,00 is kept on the balance sheet until the end of the year. Question 4 Not yet answered Interest expense can be considered part of the cost of the asset if three of these statements are met. Select the three correct statements. Points out of 1.00 P Flag question Select one or more: a. Interest costs are being incurred. O b. The company issued debt before it acquired the property to be sure they had money to acquire it O c. Expenditures for the asset have been made. d. The company has an option to purchase the land, but is waiting for the economic conditions to improve. e. Activities to get the asset ready for its intended use are in progress.

Answer 1

0 Answer B. It is charged as expenditure; since land is an inventory to a real estate business but not an asset to capitalize. 2 Interest costs can be included as a part of cost of asset if the C) Interests are being incurred (ii) Expenditures for the asset have been made (w) Activities to get the asset ready for its intended use are in progrees above three conditions are statisfied.