Response to the following questions:
1. A company has developed a tract of land into a ski resort. The company has cut the trees, cleared and graded the land and hills, and constructed ski lifts.
(a) Should the tree cutting, land clearing, and grading costs of constructing the ski slopes be debited to the land account?
(b) If such costs are debited to Land, should they be depreciated?
2. Ball-Peen Metal Casting Co. reported $859,600 for equipment and $317,500 for accumulated depreciation-equipment on its balance sheet.
Does this mean
(a) that the replacement cost of the equipment is $859,600 and
(b) that $317,500 is set aside in a special fund for the replacement of the equipment? Explain.