pter Long-Term Operating Assets: Acquisition, Cost Allocation, and Derecognition ) Property, plant, and equipment include both tangible and intangible fixed assets. 2) Capitalization is the process of recording an expenditure as an asset. 3) The cost o land includes the purchase price and land improvement costs. 4) W hen land is purchased and an old building thereon is demolished (RAZED), the total purchas e price plus the demolition cost is the total capitalized value of the land. 5) When land is purchased and landscaping improvements are made, the total purchase pr ice plus the improvement cost is the total capitalized value of the land 6) When more than one different type of asset is acquired in one purchase transactio total purchase price (Market Value) is allocated among the assets in proportion to their fair values 7) The amount of capitalizable interest for a constructed asset is the lessor of the act nterest incurred and avoidable interest. ual 8) For constructed assets, the amount of capitalized interest is calculated as total construction costs times the applicable interest rate 9) To determine the amount of interest to capitalize, the interest rate on specified borrowings to finance construction of the asset is multiplied times the total weighted- average accumulated expenditures 10) IFRS permits capitalization of interest on specitic borrowings related to both constructed and purchased assets. 11) With basket purchases, the firm allocates one purchase price to specific assets based on fair values 12) Which of the following is not a major characteristic of a fixed asset? A) Acquired for resale (speculative) B) Tangible in nature C) Expected to be used for more than one year D) Used in production and sale of other assets 13) A cost that is recorded as an asset is ) An operating expenditure B) A tangible expenditure C) An intangible expenditure D) A capital expenditure