Accounting: Chapter 18

Recording a plant asset for the amount paid for the asset is an application of the Matching Expenses with Revenue accounting concept.

• True
• False

Plant assets decrease in value because of use and the passage of time.

• True
• False

A factor that affects the useful life of a plant asset is the asset's cost.

• True
• False

The original cost of a plant asset includes the amount paid the vendor for the plant asset.

• True
• False

Estimated total depreciation expense is calculated as original cost less estimated salvage value.

• True
• False

The portion of a plant asset's cost that is transferred to an expense account in each fiscal period during a plant asset's useful life is accumulated depreciation.

• True
• False

Loss on plant assets is revenue that results when a plant asset is sold for more than book value.

• True
• False

Personal property includes buildings but not land.

• True
• False

Original Cost: $6400; salvage value: $400; useful life: 10 years; purchased 1/1. What is the annual depreciation?

• $50

• $500

• $600

• $400

Original Cost: $6400; salvage value: $400; useful life: 10 years; purchased 3/1. What is the annual depreciation in year 1?

• $50
• $100
• $500
• $600