COMPLETE TEST BANK FOR INTERMEDIATE
ACCOUNTING 3RD EDITION – GORDON,
RAEDY, & SANNELLA
◉ Which of the following is not a major characteristic of a plant
asset?
a. Possesses physical substance
b. Acquired for resale
c. Acquired for use
d. Yields services over a number of years Answer: b
◉ Which of these is not a major characteristic of a plant asset?
a. Possesses physical substance
b. Acquired for use in operations
c. Yields services over a number of years
d. All of these are major characteristics of a plant asset. Answer: d
◉ Cotton Hotel Corporation recently purchased Emporia Hotel and
the land on which it is located with the plan to tear down the
Emporia Hotel and build a new luxury hotel on the site. The cost of
the Emporia Hotel should be
,a. depreciated over the period from acquisition to the date the hotel
is scheduled to be torn down.
b. written off as an extraordinary loss in the year the hotel is torn
down.
c. capitalized as part of the cost of the land.
d. capitalized as part of the cost of the new hotel. Answer: c
◉ The cost of land does not include
a. costs of grading, filling, draining, and clearing.
b. costs of removing old buildings.
c. costs of improvements with limited lives.
d. special assessments. Answer: c
◉ The cost of land typically includes the purchase price and all of
the following costs except
a. grading, filling, draining, and clearing costs.
b. street lights, sewers, and drainage systems cost.
c. private driveways and parking lots.
d. assumption of any liens or mortgages on the property. Answer: c
◉ If a corporation purchases a lot and building and subsequently
tears down the building and uses the property as a parking lot, the
, proper accounting treatment of the cost of the building would
depend on
a. the significance of the cost allocated to the building in relation to
the combined cost of the lot and building.
b. the length of time for which the building was held prior to its
demolition.
c. the contemplated future use of the parking lot.
d. the intention of management for the property when the building
was acquired. Answer: d
◉ The debit for a sales tax properly levied and paid on the purchase
of machinery preferably would be a charge to
a. the machinery account.
b. a separate deferred charge account.
c. miscellaneous tax expense (which includes all taxes other than
those on income).
d. accumulated depreciation--machinery. Answer: a
◉ Fences and parking lots are reported on the balance sheet as
a. current assets.
b. land improvements.
c. land.
d. property and equipment. Answer: b
ACCOUNTING 3RD EDITION – GORDON,
RAEDY, & SANNELLA
◉ Which of the following is not a major characteristic of a plant
asset?
a. Possesses physical substance
b. Acquired for resale
c. Acquired for use
d. Yields services over a number of years Answer: b
◉ Which of these is not a major characteristic of a plant asset?
a. Possesses physical substance
b. Acquired for use in operations
c. Yields services over a number of years
d. All of these are major characteristics of a plant asset. Answer: d
◉ Cotton Hotel Corporation recently purchased Emporia Hotel and
the land on which it is located with the plan to tear down the
Emporia Hotel and build a new luxury hotel on the site. The cost of
the Emporia Hotel should be
,a. depreciated over the period from acquisition to the date the hotel
is scheduled to be torn down.
b. written off as an extraordinary loss in the year the hotel is torn
down.
c. capitalized as part of the cost of the land.
d. capitalized as part of the cost of the new hotel. Answer: c
◉ The cost of land does not include
a. costs of grading, filling, draining, and clearing.
b. costs of removing old buildings.
c. costs of improvements with limited lives.
d. special assessments. Answer: c
◉ The cost of land typically includes the purchase price and all of
the following costs except
a. grading, filling, draining, and clearing costs.
b. street lights, sewers, and drainage systems cost.
c. private driveways and parking lots.
d. assumption of any liens or mortgages on the property. Answer: c
◉ If a corporation purchases a lot and building and subsequently
tears down the building and uses the property as a parking lot, the
, proper accounting treatment of the cost of the building would
depend on
a. the significance of the cost allocated to the building in relation to
the combined cost of the lot and building.
b. the length of time for which the building was held prior to its
demolition.
c. the contemplated future use of the parking lot.
d. the intention of management for the property when the building
was acquired. Answer: d
◉ The debit for a sales tax properly levied and paid on the purchase
of machinery preferably would be a charge to
a. the machinery account.
b. a separate deferred charge account.
c. miscellaneous tax expense (which includes all taxes other than
those on income).
d. accumulated depreciation--machinery. Answer: a
◉ Fences and parking lots are reported on the balance sheet as
a. current assets.
b. land improvements.
c. land.
d. property and equipment. Answer: b
