Question

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Answer 1

11) Answer: Option A) the total cost of the land and old building are capitalized as land cost.

The land cost capitalized includes the cost of the old building. The cost of bringing down the old building is also capitalized as land cost while sale proceeds from any materials salvaged on the demolition of the old building is reduced from the land cost.

12) Answer: Option D) Perpetual

Under the perpetual inventory system, a continuous track is kept of the inventory by updating the inventory records after every purchase or sale/issue. This would be very tedious to maintain manually and has been made much more feasible only as a result of the computer system developments.