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HI Ninjas, there is a Ninja MCQ confused me and I would like to seek some help here. Jeff, let me know if i am not suppose to post the original question.
The question is:
John began a project to construct new corporate headquarters. John purchased land with an existing building for $750,000. The land was valued at $700,000 and the building at $50,000.John planned to demolish the building and construct a new office building on the site. What is the appropriate accounting treatment for interest of $186,000 on construction financing paid during construction?
the answer is Classify as building and depreciate.
My question is why not Classify as land and do not depreciate? or allocate between these two?
thank you!
FAR - 83, 04/2015
AUD - 73, 86, 08/2015
REG - 75
BEC - 71, rematch in 04/2016
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