The first step in the development process is to gain control of the site. What is the most common, and lowest risk, method to obtain control of a site from another owner? O By purchasing directly from the existing owner O By negotiating an option to purchase from the existing owner By purchasing land at auction from the city O By borrowing money from a construction lender
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- Under IFRS, research must be expensed but some development expenditures may be capitalized. To capitalize development expenditures, firms must demonstrate several factors that include all of the following except: Multiple Choice technical feasibility. length of time the intangible asset is expected to provide benefits. ability to use or sell the asset. how the intangible asset will generate probable future economic benefits.What are the unique risks of land development projects from the developer’s and lender’s points of view?A company may acquire property, plant, and equipment and intangible assets for cash, in exchange for a deferred payment contract, by exchanging other assets, or by a combination of these methods. Required: 1. Identify six types of costs that should be capitalized as the cost of a parcel of land. For your answer, assume that the land has an existing building that is to be removed in the immediate future in order that a new building can be constructed on the site. 2. At what amount should a company record an asset acquired in exchange for a deferred payment contract? 3. In general, at what amount should assets received in exchange for other nonmonetary assets be valued? Specifically, at what amount should a company value a new machine acquired by exchanging an older, similar machine and paying cash?
- REITs can expand their income by: Group of answer choices Speculating with “build-to-suit” projects for existing tenants By engaging in any or all of these activities Offering property management, marketing or other services to third parties By using financial leverageWhen determining the best time to replace an existing asset, for what reason would you need to use marginal analysis?a. To determine what the most appropriate tax rate for the project should beb. To estimate the cost of capital for the new assetc. To determine if the defender asset should be used beyond its ESL.d. To determine the length of time the challenger asset should be used once it is placed into service.Companies that acquire intangible assets under IFRS may only utilize the revaluation model if the useful life of the asset can be easily identified. b. The intangible asset has a thriving market for sale. You have a reliable way of calculating the intangible asset's cost. D. The intangible property consists of money.
- Why would refinancing be an alternative to sale of the property?An individual who's job is to identify well located vacant land is likely to be working for a company specializing in which of the following: Select one: O a. Property management O b. Development O c. Project Management O d. Construction O e. LeasingWhich of the following is an indirect investment? a) Joint venture b) Property loan c) REIT d) Asset purchase Please ensure accuracy and explain your choice
- Indicate whether each of the following statements is true or false. When land with an old building is purchased as a future building site, the cost of removing the old building is part of the cost of the new building. Answer Special assessments for local improvements such as streetlights and sewers should be accounted for as land improvements. Answer Avoidable interest is the amount of interest cost that a company could theoretically avoid if it had not made expenditures for the asset.In view of the investor, what is the best type of depreciation method? Justify your answer in terms of computation.What is an option contract? How is it used in the land acquisition? What should developers be concerned with when using such options? What contingencies may be included in a land option?