Question

Cotton Hotel Corporation recently purchased Emporia Hotel and the land on which it is located with the plan to tear down the Emporia Hotel and build a new luxury hotel on the site. The cost of the Emporia Hotel should be

Answer 1

Answer:

c. capitalized as part of the cost of the land.

Explanation:

These are the options for the question

a. depreciated over the period from acquisition to the date the hotel is scheduled to be torn down.

b. written off as an extraordinary loss in the year the hotel is torn down.

c. capitalized as part of the cost of the land.

d. capitalized as part of the cost of the new hotel.

From the question, we are informed about Cotton Hotel Corporation

which recentlyy purchased Emporia Hotel and the land on which it is located with the plan to tear down the Emporia Hotel and build a new luxury hotel on the site. The cost of the Emporia Hotel should be capitalized as part of the cost of the land. In financial accounting, cost of land can be regarded as asset valuation method which can be used to land that shows on the balance sheet of a company. This cost would encompass all amount spent when acquiring the property and other expenses.

,