Which of the following costs can be capitalized when buying a building?

When purchasing a building, certain costs can be capitalized, meaning they are added to the cost basis of the property rather than being expensed in the current period. This is important because capitalized costs are depreciated over the useful life of the asset, impacting financial statements over time.

Realtor commissions and legal fees directly related to the acquisition of the property are considered necessary to complete the purchase and are thus capitalized as part of the total acquisition costs. These costs contribute to bringing the building to a condition ready for use, which aligns with the criteria for capitalization under accounting principles.

In contrast, annual maintenance costs, future utility expenses, and staff training expenses are considered regular operational costs. Annual maintenance and utilities are ongoing expenses necessary for the operation and upkeep of the building, but they do not improve the building or extend its useful life—they are incurred after the building is acquired. Staff training expenses are also operational in nature and do not contribute to the capitalizable cost of the building itself. Therefore, only the realtor commissions and legal fees are correctly included in the capitalization of the purchase of the building.