Final answer:
The costs for clearing, draining, filling, and grading should be capitalized as part of the Land account, not to Land Improvements, if they are necessary for making the land ready for its intended use. Therefore, the answer is 2. False.
Step-by-step explanation:
The costs for clearing, draining, filling, and grading land are indeed capital expenditures but they are not charged to Land Improvements if they are necessary to prepare the land for its intended use. Instead, these costs should be capitalized as part of the Land account. This is because these costs are needed to get the land in a condition suitable for its intended use and hence, they are not considered as separate improvements but rather part of the acquisition cost of the land itself.
Land Improvements typically refer to enhancements that have a limited life and can be depreciated over time, such as sidewalks, driveways, fences, and landscaping. The original question seems to confuse initial land preparation with improvements that typically occur after the land is prepared for use. Therefore, the correct answer to the student's question is False.