$5.00 PR 9-1A
The following payments and receipts are related to land, land improvements, and buildings acquired for use in a wholesale ceramic business. The receipts are identified by an asterisk.
1. Assign each payment and receipt to Land (unlimited life), Land Improvements (limited life), Building, or other Accounts. Indicate receipts by an asterisk. Identify each item by letter and list the amounts in columnar form, as follows:
Item Land Land Improvements Building Other Accounts
2. Determine the amount debited to Land, Land improvements, and building.
3. The Costs assigned to the land, which is used as a plant site, will not be depreciated, while the costs assigned to land improvements will be depreciated. Explain this seemingly contradictory application of the concept of depreciation.