Intermediate Accounting 2 - Assessment 1er Taller

The Accounting Equation is...

• A - L = OE

• A + L = OE

• A = L + OE

• A AND C

Which of the following is not a major characteristic of a plant asset?

• They are acquired for use in operations.

• They are long-term in nature and are always subject to depreciation.

• They possess physical substance.

• Acquired for resale

In order for a cost to be capitalized (capital expenditure), the following must be present:

• The useful life of an asset must be increased.

• The quantity of assets must be increased.

• The quality of assets must be increased.

• Any one of these.

Property, plant, and equipment are conventionally presented in the balance sheet at

• replacement cost less accumulated depreciation.

• historical cost less salvage value.

• original cost less accumulated depreciation.

• acquisition cost less net book value thereof.

The building permits cost should be recorded in this appropriate account...

• Land

• Building

• Land Improvements

Demolition costs of building on land bought for plant site should be recorded in this appropriate account...

• Land

• Building

• Land Improvements

Parking lots cost should be recorded in this appropriate account...

• Land

• Building

• Land Improvements

As generally used in accounting, what is depreciation?

• It is a process of asset valuation for balance sheet purposes.

• It applies only to long-lived intangible assets.

• It is used to indicate a decline in market value of a long-lived asset.

• It is an accounting process which allocates long-lived asset cost to accounting periods.

Assets classified as Property, Plant, and Equipment can be either acquired for use in operations, or acquired for resale.

• True

• False

Costs incurred subsequent to the acquisition of an asset are capitalized if they provide future benefits.

• True

• False