2/22/25, 8:31 AM LO 8-1: Identify & determine the cost of long-term operational assets: SP2025 MBA 601-QL/QX Accounting / Finance for Mgrs
Question 1 pts
Which of the following is not a tangible asset?
Building
orrect! Copyright
Land
Gold
Tangible assets are things that can be perceived by the sensory system.
In other words, tangible assets are things that you can see or touch
including things like buildings, land, or gold. On the other hand, a
copyright is a privilege granted by the government. A privilege is an
intangible asset. While it provides an economic benefit, it cannot be
seen or touched.
Question 2 pts
Land is different from other tangible assets in that its utility is not diminished by
its use. This statement is
orrect! True
False
,2/22/25, 8:31 AM LO 8-1: Identify & determine the cost of long-term operational assets: SP2025 MBA 601-QL/QX Accounting / Finance for Mgrs
Using land does not damage its usefulness. To illustrate, consider the
land on which a building rests. The building may become dilapidated to
the point it is torn down while the land on which the building sits does
not lose its capacity to support another building.
Question 3 pts
Which of the following is an intangible asset?
Patent
Copyright
Trademark
orrect! All of the answers are names of intangible assets.
Intangible assets cannot be seen or touched. Do not be confused by the
fact that you can see a trademark. The image you see is not the
intangible asset. The intangible asset is the exclusive right to use the
image for branding a product. Similarly, you can see a book that is
protected by a copyright. Again, the intangible asset is not the book but
instead the exclusive privilege to publish, reproduce, sell, or otherwise
distribute the content contained in the book.
Question 4 pts
Capitalizing the cash cost of a piece of equipment is
orrect! an asset exchange event
an asset source event
,2/22/25, 8:31 AM LO 8-1: Identify & determine the cost of long-term operational assets: SP2025 MBA 601-QL/QX Accounting / Finance for Mgrs
an asset use event
an equity exchange event
Capitalizing the cost of equipment means to record its cost in an asset
account. Capitalizing the cost is an asset exchange event. One asset
account (cash) decreases and another asset (equipment) increases.
Total assets are not affected.
Question 5 pts
Corazon Company purchased an asset with a list price of $14,000. Corazon
paid $500 of transportation-in cost, $800 to train an employee to operate the
equipment, and $200 to ensure the asset against theft after it has been set up
in the factory. The asset was purchased under terms 1/20/n30 and Corazon
paid for the asset within the discount period. Based on this information,
Corazon would capitalize the asset on its books at:
Note: "Terms 1/20/n30" means a 1% discount is offered if the purchase is paid
within 20 days, otherwise the purchase must be paid within 30 days.
$14,000
$14,660
orrect! $15,160
$14,800
, 2/22/25, 8:31 AM LO 8-1: Identify & determine the cost of long-term operational assets: SP2025 MBA 601-QL/QX Accounting / Finance for Mgrs
Cost of Asset:
List Price $14,000
Plus: Transportation in 500
Plus: Training 800
Less: Cash discount ($14,000 list price × 0.01 discount) (140 )
Total cost capitalized $15,160
The general rule in determining which costs to capitalize in an asset
account is to capitalize any cost that is necessary to obtain the asset or
to make it ready for use. Note that the $200 of insurance was not
included because it applied to coverage after the asset had been
acquired and set up for use.
Question 6 pts
All training costs associated with the purchase and continuing use of an asset
should be capitalized in the asset account. This statement is
True
orrect! False
Only the initial training cost should be capitalized. Training cost incurred
after the asset is up and running should be expensed.
Question 7 pts
When the total estimated market value of assets acquired in a basket purchase
is greater than the cost of the purchase, the company making the purchase
must recognize a gain.
Question 1 pts
Which of the following is not a tangible asset?
Building
orrect! Copyright
Land
Gold
Tangible assets are things that can be perceived by the sensory system.
In other words, tangible assets are things that you can see or touch
including things like buildings, land, or gold. On the other hand, a
copyright is a privilege granted by the government. A privilege is an
intangible asset. While it provides an economic benefit, it cannot be
seen or touched.
Question 2 pts
Land is different from other tangible assets in that its utility is not diminished by
its use. This statement is
orrect! True
False
,2/22/25, 8:31 AM LO 8-1: Identify & determine the cost of long-term operational assets: SP2025 MBA 601-QL/QX Accounting / Finance for Mgrs
Using land does not damage its usefulness. To illustrate, consider the
land on which a building rests. The building may become dilapidated to
the point it is torn down while the land on which the building sits does
not lose its capacity to support another building.
Question 3 pts
Which of the following is an intangible asset?
Patent
Copyright
Trademark
orrect! All of the answers are names of intangible assets.
Intangible assets cannot be seen or touched. Do not be confused by the
fact that you can see a trademark. The image you see is not the
intangible asset. The intangible asset is the exclusive right to use the
image for branding a product. Similarly, you can see a book that is
protected by a copyright. Again, the intangible asset is not the book but
instead the exclusive privilege to publish, reproduce, sell, or otherwise
distribute the content contained in the book.
Question 4 pts
Capitalizing the cash cost of a piece of equipment is
orrect! an asset exchange event
an asset source event
,2/22/25, 8:31 AM LO 8-1: Identify & determine the cost of long-term operational assets: SP2025 MBA 601-QL/QX Accounting / Finance for Mgrs
an asset use event
an equity exchange event
Capitalizing the cost of equipment means to record its cost in an asset
account. Capitalizing the cost is an asset exchange event. One asset
account (cash) decreases and another asset (equipment) increases.
Total assets are not affected.
Question 5 pts
Corazon Company purchased an asset with a list price of $14,000. Corazon
paid $500 of transportation-in cost, $800 to train an employee to operate the
equipment, and $200 to ensure the asset against theft after it has been set up
in the factory. The asset was purchased under terms 1/20/n30 and Corazon
paid for the asset within the discount period. Based on this information,
Corazon would capitalize the asset on its books at:
Note: "Terms 1/20/n30" means a 1% discount is offered if the purchase is paid
within 20 days, otherwise the purchase must be paid within 30 days.
$14,000
$14,660
orrect! $15,160
$14,800
, 2/22/25, 8:31 AM LO 8-1: Identify & determine the cost of long-term operational assets: SP2025 MBA 601-QL/QX Accounting / Finance for Mgrs
Cost of Asset:
List Price $14,000
Plus: Transportation in 500
Plus: Training 800
Less: Cash discount ($14,000 list price × 0.01 discount) (140 )
Total cost capitalized $15,160
The general rule in determining which costs to capitalize in an asset
account is to capitalize any cost that is necessary to obtain the asset or
to make it ready for use. Note that the $200 of insurance was not
included because it applied to coverage after the asset had been
acquired and set up for use.
Question 6 pts
All training costs associated with the purchase and continuing use of an asset
should be capitalized in the asset account. This statement is
True
orrect! False
Only the initial training cost should be capitalized. Training cost incurred
after the asset is up and running should be expensed.
Question 7 pts
When the total estimated market value of assets acquired in a basket purchase
is greater than the cost of the purchase, the company making the purchase
must recognize a gain.
