Any excess of fair value over book value attributable to land on the date of acquisition is to be:
A) allocated to other identifiable assets.
B) capitalized and amortized.
C) charged to Retained Earnings on the date of acquisition.
D) taken into income when the Land is sold.

Question

Quizplus · Accepted Answer

When an excess of fair value over book value is attributable to land on the date of acquisition, it is not amortized because land has an indefinite life. Instead, this excess is recognized in income upon the sale of the land, reflecting the realized gain.

Any Excess of Fair Value Over Book Value Attributable to Land