Which of the following is not a characteristics of an asset that us classified as property, plant and equipment? a. It has physical aubstance B. It is long term in nature C. It is acquired for use in business operations. D. It is acquired for resale.

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter7: Fixed Assets, Natural Resources, And Intangible Assets
Section: Chapter Questions
Problem 7.1.3P
icon
Related questions
Question

Which of the following is not a characteristics of an asset that us classified as property, plant and equipment?
a. It has physical aubstance
B. It is long term in nature
C. It is acquired for use in business operations.
D. It is acquired for resale.

2. Which of the following is excluded from " Property,plant and equipment?
A. Major spare parts and long live stand by equipment.
B. Building used in business
C. Equipment held for rentals
D. Held for sale assets


3. The initial cost of an item of property, plant, and equipment includes.
A. Purchase cost
B. Direct cost
C. Decomissioning and restoration cost
D. All of these.


4.Which of the following is not capitalized as cost of land?
A. Land improvements that have indifinite useful life
B. Unpaid taxes on the property prior to the acquisition date not assumed by the entity
C. Closing costs, such as titling and similar cost
D Special assessment

5. Knife Co. Acquires a building by paying 6m and assuming a 2M unpaid mortgage on the building. How should knife Co. Account for the 2M unpaid mortgage?
A. Capitalize as cost of the building
B. Recognize as a liability
C. Expense outright
D. A and B


6. The lump-sun acquisition cost of land and building is not allocated to the individual assets if
A. The land and building are classified as investment property measured at cost.
B. The existing building is to be demolished right after the acqusition to make way for the construction of a new one.
C. The land and the building are classified as investment property measured at fair value.
D. The entity's management intends not to use the existing building.


7. Income earned from incidental operations before an asset is put to use is
A. Immediately recognized in profit or loss together with the related expense.
B. Depreciated over the estimated useful life of the asset.
C. Deducted from the cost of the asset.
D. Added to the cost of the asset.

8. The demolition cost of an old building before a new one is constructed are
A. Expensed
B. Included in the cost of the land
C. Included in the cost of the new building.
D. Included in the cost of the new building, net of any proceeds from sale of salvaged materials from the demolition.


9. PAS 16 states that if an exchange transaction causes a significant change in cash flows, The transaction has commercial substance. In transaction of this type, at what amount should the entity record the asset received.
A. Book value
B. Intrinsic Value
C. Book value plus boot
D. Fair value


10. May Co. and sty co exchanged nonmonetary assets nd May paid cash to sty in the transaction. May stated that the exchange had commercial substance. However, the assets exchanged were so specialized that there was not an objective basis to determine a fair value. In cases like this, the standards suggest that may record the asset at
A. Estimated Fair Value
B. Book Value
C. Carrying amount of asset given up plus cash paid.
D. Intrinsic Value

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Federal financial accounting and reporting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Income Tax Fundamentals 2020
Income Tax Fundamentals 2020
Accounting
ISBN:
9780357391129
Author:
WHITTENBURG
Publisher:
Cengage
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College