AC Corporation bought a building lot to construct a new corporate office buildin

Question

AC Corporation bought a building lot to construct a new corporate office building. An older home, which was on the building lot, was razed immediately so that the office building could be constructed. The cost of purchasing the older home should be: a.capitalized as part of the cost of the land.
b. written off as a loss in the year of purchase.
c.written off as an extraordinary item in the year of purchase.
d. capitalized as part of the cost of the new building.

I think it is a or d, explain you answer please

Explanation / Answer

option "d" is the correct answer. when we are cunstructing building we need to consider the cost of foundation also ,the razing of building comes under the above item. so we should capitalize the cost.

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