,Chapter G Property, Plant, and Equipment and Intangibles
Student name:
1) Property, plant and equipment are assets held for sale.
⊚ true
⊚ false
2) Non-current assets can be divided into two groups including tangible and intangible assets.
These assets are generally used in operations of a business and have useful lives extending
over more than one accounting period.
⊚ true
⊚ false
3) Land purchased as a building site is a tangible asset called property, plant and equipment
and is classified under the "Long-term Investments" section on the balance sheet.
⊚ true
⊚ false
4) The cost of an asset includes all normal and reasonable expenditures necessary to get
the asset in place and ready for its intended use.
⊚ true
⊚ false
5) If a machine is damaged during unpacking, the repairs are added to its cost.
⊚ true
⊚ false
6) To be charged to and reported as part of the cost of property, plant and equipment, an
expenditure must be normal, reasonable, and necessary in preparing the asset for its
intended use.
⊚ true
⊚ false
,Chapter G Property, Plant, and Equipment and Intangibles
7) The purchase of real estate that includes land, building, and land improvements is called
a lump-sum purchase.
⊚ true
⊚ false
8) Any expenditures for legal fees, surveying, and accrued property taxes should not
be included in the cost of land.
⊚ true
⊚ false
9) SportsWorld spent $17,000 to remodel its store. This cost will be recognized with a debit
to Store Building.
⊚ true
⊚ false
10) The cost principle requires that an asset be recorded at the cash or cash equivalent
amount given in exchange.
⊚ true
⊚ false
11) Subsequent expenditures are purchases made after the acquisition of equipment to
operate, maintain, repair, and improve it.
⊚ true
⊚ false
12) Because land has unlimited life, it is not subject to depreciation. Therefore, items
that increase the usefulness of the land such as parking lots are also not depreciated.
⊚ true
⊚ false
, Chapter G Property, Plant, and Equipment and Intangibles
13) Depreciation is the process of allocating the cost of a tangible asset in a rational
and systematic manner over the asset's estimated useful life.
⊚ true
⊚ false
14) Residual value is an estimate of an asset's value at the end of its useful life.
⊚ true
⊚ false
15) Inadequacy refers to the condition where the capacity of a property, plant and
equipment item is too small to meet the company's productive demands.
⊚ true
⊚ false
16) Depreciation should always be recorded as soon as an asset is purchased.
⊚ true
⊚ false
17) Depreciation measures the decline in market value of an asset.
⊚ true
⊚ false
18) On the balance sheet, it is not necessary to report both the cost and the
accumulated depreciation of an asset.
⊚ true
⊚ false
19) Accumulated depreciation represents funds set aside to buy new assets when the
assets currently owned are replaced.
⊚ true
⊚ false
Student name:
1) Property, plant and equipment are assets held for sale.
⊚ true
⊚ false
2) Non-current assets can be divided into two groups including tangible and intangible assets.
These assets are generally used in operations of a business and have useful lives extending
over more than one accounting period.
⊚ true
⊚ false
3) Land purchased as a building site is a tangible asset called property, plant and equipment
and is classified under the "Long-term Investments" section on the balance sheet.
⊚ true
⊚ false
4) The cost of an asset includes all normal and reasonable expenditures necessary to get
the asset in place and ready for its intended use.
⊚ true
⊚ false
5) If a machine is damaged during unpacking, the repairs are added to its cost.
⊚ true
⊚ false
6) To be charged to and reported as part of the cost of property, plant and equipment, an
expenditure must be normal, reasonable, and necessary in preparing the asset for its
intended use.
⊚ true
⊚ false
,Chapter G Property, Plant, and Equipment and Intangibles
7) The purchase of real estate that includes land, building, and land improvements is called
a lump-sum purchase.
⊚ true
⊚ false
8) Any expenditures for legal fees, surveying, and accrued property taxes should not
be included in the cost of land.
⊚ true
⊚ false
9) SportsWorld spent $17,000 to remodel its store. This cost will be recognized with a debit
to Store Building.
⊚ true
⊚ false
10) The cost principle requires that an asset be recorded at the cash or cash equivalent
amount given in exchange.
⊚ true
⊚ false
11) Subsequent expenditures are purchases made after the acquisition of equipment to
operate, maintain, repair, and improve it.
⊚ true
⊚ false
12) Because land has unlimited life, it is not subject to depreciation. Therefore, items
that increase the usefulness of the land such as parking lots are also not depreciated.
⊚ true
⊚ false
, Chapter G Property, Plant, and Equipment and Intangibles
13) Depreciation is the process of allocating the cost of a tangible asset in a rational
and systematic manner over the asset's estimated useful life.
⊚ true
⊚ false
14) Residual value is an estimate of an asset's value at the end of its useful life.
⊚ true
⊚ false
15) Inadequacy refers to the condition where the capacity of a property, plant and
equipment item is too small to meet the company's productive demands.
⊚ true
⊚ false
16) Depreciation should always be recorded as soon as an asset is purchased.
⊚ true
⊚ false
17) Depreciation measures the decline in market value of an asset.
⊚ true
⊚ false
18) On the balance sheet, it is not necessary to report both the cost and the
accumulated depreciation of an asset.
⊚ true
⊚ false
19) Accumulated depreciation represents funds set aside to buy new assets when the
assets currently owned are replaced.
⊚ true
⊚ false
