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21 October, 11:03

A company has purchased a tract of land and expects to build a production plant on the land in approximately 5 years. During the 5 years before construction, the land will be idle. Under IFRS, the land should be reported as: (a) land expense. (b) property, plant, and equipment. (c) an intangible asset. (d) a long-term investment.

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  1. 21 October, 11:21
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    Under IFRS, the land should be reported as a long-term investment.

    Option d

    Explanation:

    Land is always considered as an asset which is used for the company's manufacturing process. The land can be classified as the investment and it may not be used in the process of operation of the company.

    Since it is not used for the operation it is classified as a long term investment not as a long term asset. So according to the IRFS that is International Financial Reporting Standards the land owned by the company must be declared as a long term investment.
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