Question Bank - Accountancy

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Legal fees paid to acquire a piece of land is ______.

A.
debited to land account
B.
debited to depreciation account
C.
debited to profit and loss account
D.
debited to miscellaneous expenses account

Solution:

Legal fees paid to acquire a piece of land are debited to the land account. As per Accounting Standards 10, all those costs which are incurred in connection to acquiring any fixed assets should be added to the cost of that fixed asset itself. In the above question legal fees paid to acquire a piece of land should be added to the cost of the land itself. Therefore, Legal fees paid to acquire a piece of land are debited to the land account.

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