Question

Which of the following is a long-lived asset? Land on which a new store is located...

Which of the following is a long-lived asset?

Land on which a new store is located

Land purchased for resale next month

Cash

Retained earnings
Business   Accounting   
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Homework Answers

Answer #1

Correct Answer -- Land on which a new store is located.

Explanation

A long lived asset is an asset which is expected to be retained in the business for more than one year or accounting period.

As given in the question Land Purchased for sale in the next month, cash are not expected to remain in the business for more than one accounting period. Retained Earnings is not an asset but a part of shareholder’s Equity.

The Only asset remains is land on which a new store is located. Since store is located on the land it is not expected that the land will be sold in the future.

Conclusion

Land on which a new store is located is considered as a long lived asset.

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