Question

a company bought land and a building for 128,000. the building has a useful life of 20 years. why should the company split the 128,000 cost between the land the building?

Answer 1

When a company buys land and a building, it is important to split the cost between the land and the building because they have different useful lives and values.

Step-by-step explanation:

When a company buys land and a building, it is important to split the cost between the land and the building because they have different useful lives and values. Land is considered to have an indefinite useful life and its value tends to appreciate over time. On the other hand, buildings have a limited useful life and typically depreciate in value over time. By splitting the cost, the company can accurately allocate the expense and track the depreciation of the building separately from the land.