1. Demolition costs to remove an old building from land purchased as a site for a new building are considered part of the cost of the new building.

True

False

2. Productive assets that are physically consumed in operations are:

		A) Land improvements.
		B) Equipment.
		C) Land.
		D) Natural resources.

3. Costs incurred after discovery of a natural resource but before production begins are reported as expenses of the period in which the expenditures are made.

True

False

4. The allocation base of an asset refers to which of the following?

		A) The number of years over which the asset's cost will be allocated.
		B) The asset's initial capitalized cost minus residual value.
		C) The method used to allocate the asset's cost across years.
		D) The asset's initial capitalized cost.

5. "Assuming an asset is used evenly over a four-year service life, which method of depreciation will always result in the largest amount of depreciation in the first year?"

		A) Double-declining balance.
		B) Straight-line.
		C) Sum-of-the-year's digits.
		D) Units-of-production.