Question

The cost of constructing a new parking lot at the company's office building would be recorded as:

Answer 1

Answer:

b. Land improvement.

Explanation:

Total assets include current assets, fixed assets, and intangible assets Current assets include cash, stock, receivable account, etc. Fixed assets include plant & machinery, property, facilities, furniture & equipment, land, etc.

And the intangible assets are trademarks, copyrights, goodwill, and other intellectual properties.

The main difference between land and land improvements is that the land is a non-depreciable asset plus it has unlimited life whereas land improvement is depreciated assets and it has a limited life.  

The example of land improvement includes the parking lot, lighting, fences, etc