Q.Legal charges paid for the purchase of a building should be:
(A) Debited to a separate Legal Charges Account and treated as Revenue Expenditure
(B) Added to the cost of the building
(C) Treated as a Deferred Revenue Expenditure
(D) Ignored, since legal charges are never part of accounting records

Legal charges incurred specifically to complete the purchase of a building are part of what it genuinely cost to acquire that asset.

Any expenditure incurred to acquire a fixed asset and complete its acquisition — including legal charges on a property purchase — is added to that asset's cost, since without incurring it the asset could not have been legally acquired in the first place.

Option-by-option analysis:

• (A) Incorrect — this is not a routine, recurring legal expense; it is directly tied to acquiring the specific asset.
• (B) Correct — legal charges on acquisition are capitalised into the building's cost. …