A company has purchased a tract of land. It expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. The land should be reported as —

Answer: C) A long-term investment

A) Property, plant, and equipment
B) Land expense
C) A long-term investment
D) An intangible asset

Explanation

A long-term investment. The land is not being used in operations now and will sit idle for about five years. Property, plant and equipment covers assets in active use. Land is not expensed, because it keeps its value, and it is a physical asset, so it is not intangible.

Asked in: KGDCL 2021

Topic: Thermodynamics, Pumps and Compressors

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A company has purchased a tract of land. It expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. The land should be reported as —

Explanation

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