20A2 - Intermediate Accounting - Fixed Assets

The cost of an item of fixed assets is only recognized if the cost of the item can be reliably measured and if:

• it is not directly attributable to the asset.

• it has been paid for in cash.

• it is probable that future economic benefits will flow to the entity.

• the item has been received by the acquirer.

A company may retire plant assets voluntarily or dispose of them by:

• Sale

• Involuntary conversion

• None of the above

• All of the above

The depreciation charge calculated using the diminishing balance method reflects:

• an increasing pattern of benefits over the asset’s useful life.

• a decreasing pattern of benefits over the asset’s useful life.

• a constant pattern of benefits over the asset’s useful life.

• a fluctuating pattern of benefits over the asset’s useful life.

Land held by a real estate concern for resale should be classified as ..........

Companies should use the ............. value of the assets to establish its value on the books.