Answered: The cost of an item of property, plant…

The cost of an item of property, plant and equipment includes all of the following, except Purchase price Directly attributable costs of bringing the asset to working condition for its intended use

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter18: Accounting For Long-term Assets

Section: Chapter Questions

Problem 1SEA

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Question

The cost of an item of property, plant and equipment includes all of the following, except
Purchase price
Directly attributable costs of bringing the asset to working condition for its intended use
Trade discount and rebates
Import duties and nonrefundable purchase taxes

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Depreciation of a plant asset is the process of ________. A. asset valuation for statement of financial position purposes B. allocation of the assets cost to the periods of use C. fund accumulation for the replacement of the asset D. asset valuation based on current replacement cost data
Which of the following costs are capitalized when purchasing a piece of equipment? a. The invoiced price of the equipment b. Sales taxes c. All installation costs related to the equipment d. All of the above
Gains and losses arising from the retirement or disposal of an item of property, plant and equipment shall be determined as the difference between * Gross disposal proceeds and the cost of the asset Gross disposal proceeds and the carrying amount of the asset Net disposal proceeds and the cost of the asset Net disposal proceeds and the carrying amount of the asset
Which statements are correct concerning measurement of cost of property, plant and equipment?I. The purchase price of an item of property, plant and equipment is the cash price equivalent at the date of recognitionII. If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and total payment is recognized as interest expense over the life of the asset.III. If an item of property, plant and equipment is acquired in exchange for a nonmonetary asset or a combination of monetary and nonmonetary asset, the cost of such item is measured at fair value unless the exchange transaction lacks commercial substance or fair value of either asset received or given up is not reliably determinable.IV. If an entity is able to determine reliably the fair value of both the asset given up and asset received in an exchange, the fair value of the asset given up is used to measure the cost of asset received in exchange.
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