B is corrent because in general, an asset should be recorded at the cost of getting it ready for its intended use. If land is purchased with the intention of constructing a building on it, the cost of tearing down an old building on that land is part of the cost of getting the land ready for its intended use and should be added to the cost of that land. This cost attaches to the land and, therefore, should not be depreciated.
A is incorrect because the costs to tear down the building were incurred to get the land ready for its intended use. These costs attach to the land and will not be depreciated.
C is incorrect because the costs to tear down the building were incurred to get the land ready for its intended use. Therefore, these costs will have a future benefit and are not expensed as incurred.
D is incorrect because the costs to tear down the building were incurred to get the land ready for its intended use. Therefore, these costs will be added to the cost of the land, not the plant.
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