CFA Practice Question

CFA Practice Question

Which of the following is incorrect for the treatment of acquisition costs in U.S. GAAP?
A. Freight and installation costs are included in the cost of Equipment.
B. When a firm constructs a building for itself, architects' and lawyers fees are included in cost (Building account).
C. Improvements to real estate, such as landscaping, fencing, driveways etc. should be included in the Land account.
Explanation: These improvements are temporary unlike Land which is non-depreciating. hence they should be recorded in a separate account Land Improvements.

User Contributed Comments 1

User Comment
chandsingh can the land improvement a/c be depreciated like building accounts?
I noted in another question mock that real estate agent fees are part of land account, not building. Are'nt lawyer fees similar and should be treated the same?
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