Question
QUESTION 1 An asset classified as property, plant, and equipment on the balance sheet must have which one of the following characteristics? an expected life
QUESTION 1
An asset classified as property, plant, and equipment on the balance sheet must have which one of the following characteristics?
| an expected life of more than one year | ||
| used in the normal course of business | ||
| tangible in nature | ||
| all of these |
QUESTION 2
Which one of the following types of assets should not be classified as property, plant, and equipment?
| leasehold improvements | ||
| fully-depreciated building (still in use) | ||
| idle land and buildings | ||
| long-lived tangible assets |
QUESTION 3
Exhibit 10-1 Two construction companies, Dakota and Carolina, are in the construction business. Each owns a tract of land being held for development, but each company believes that the other's land is better suited to enhance the success of each planned development. Accordingly, they agree to exchange their land and have the following information:
| Dakota's | Carolina's | |
| Land | Land | |
| Cost and book value | $400,000 | $250,000 |
| Fair value based upon appraisal | $500,000 | $450,000 |
The exchange of land was made, and based on the difference in appraised fair value, Carolina paid $50,000 cash to Dakota. Refer to Exhibit 10-1. For financial reporting purposes, Carolina should recognize a gain on this exchange in the amount of
| $ 0 | ||
| $ 50,000 | ||
| $100,000 | ||
| $200,000 |
QUESTION 4
Which of the following events is most appropriately recorded as a reduction to accumulated depreciation?
| an addition that increases the anticipated benefits of the old asset | ||
| an improvement that extends an asset's useful life | ||
| an improvement that increases the asset's expected benefits beyond that originally expected | ||
| a replacement of a better asset for the one currently used |
QUESTION 5
Which one of the following statements is true?
| If a plant asset is self-constructed for less than it would cost to purchase, a profit should be recorded upon the completion of the construction. | ||
| When property, plant, or equipment is acquired through donation, no entry is recorded. | ||
| Development stage enterprises need not report losses before sales are made. | ||
| Interest cannot be capitalized when an asset is substantially complete and ready for its intended use. |
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