Whole Foods has decided to expand its retail store by building on a vacant lot i
ID: 2636786 • Letter: W
Question
Whole Foods has decided to expand its retail store by building on a vacant lot it currently owns. This lot was purchased six years ago at a cost of $495,000, which the firm paid in cash. To date, the firm has spent another $89,000 on land improvements, all of which was also paid in cash. Today, the lot has a market value of $689,000. The financial manager of Whole Foods is trying to determine the amount, if any, that should be assigned to the building project for the cost of the land. The project should:
be assigned a cost equal to the cash paid to date for both the lot and the improvements.
be assigned a cost equal to the current market value of the land plus the cash paid for the improvements.
be assigned a cost equal to the current market value of the land.
not be charged for the land since it is currently owned, debt-free, by the firm.
be assigned a cost equal to the original purchase price only.
be assigned a cost equal to the cash paid to date for both the lot and the improvements.
be assigned a cost equal to the current market value of the land plus the cash paid for the improvements.
be assigned a cost equal to the current market value of the land.
not be charged for the land since it is currently owned, debt-free, by the firm.
be assigned a cost equal to the original purchase price only.
Explanation / Answer
Not be charged for the land since it is currently owned, debt-free, by the firm.
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