Which of the following is NOT capitalized as part of land acquisition?

When considering what costs are capitalized as part of land acquisition, it is essential to focus on what constitutes the acquisition of the land itself versus subsequent costs related to the development of that land.

The acquisition price, closing costs, and site preparation costs are directly associated with obtaining the land and getting it ready for use. The acquisition price reflects the purchase cost of the land, closing costs include fees such as legal fees, title searches, and other expenses incurred during the transaction, and site preparation costs involve expenses necessary to prepare the land for its intended use, such as leveling or grading.

In contrast, excavating costs for a building are not capitalized as part of land acquisition because they are associated with the construction of the building itself rather than the acquisition or preparation of the land. These costs relate to the development of an asset (the building) that will be recorded separately from the land and its associated costs. Therefore, excavation expenses are part of the construction costs and should be capitalized as part of the building rather than the land.

This distinction highlights the fact that only costs necessary to acquire the land and prepare it for its intended use are capitalized in the land account, while building-related expenses are treated differently.