From page 7-1 of the VLN, acquisition cost would NOT include:A. Purchase price.B. Transportation cost to get the asset ready to be used.C. Sales taxes.D. Cost incurred to operate the asset. Chapter 7 Video Lecture OutlineLong Term AssetsCLASSIFICATION OF OPERATING ASSETS-non-current assets-being used in the businessPART A: AcquisitionsCapitalize – an expenditure that is classified as an assetTANGIBLE ASSETSPROPERTY, PLANT, AND EQUIPMENT (PPE)-Property (Land) the company is using in operations-Plant (Buildings)-offices, stores, storage, maing plants,etc.-Equipment--machinery, computers, copiers, vehicles, furniture,fixtures, etc.Land Improvements-includes: parking lots, sidewalks, fences, landscaping, etc., andshould be kept separate from the land accountBasket Purchase (purchasing land, building and/or equipmentin a single purchase)Acquisition Costs-Costs to buy-cash equivalent price, including taxes and otherfees-Setup costs (transportation costs, installation costs)-Costs to place the asset in service (to make usable)-reduce acquisition cost by any salvage value received fromitems sold from the asset prior to getting the asset ready to use.-Does NOT include interestSelf Constructed Assets-only time interest is included in the acquisition cost (it is calledCapitalized Interest)-once asset is completed, interest is no longer capitalized-Capitalized interest satisfies the Matching Principle

operating assets are the assets which are used in the day to day activities of the business. the…

Answered: of the VLN, acquisition cost would NOT…

of the VLN, acquisition cost would NOT include: A. Purchase price. B. Transportation cost to get the asset ready to be used. C. Sales taxes. D. Cost incurred to operate the asset

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

the equation for book value is: book value = cost of an asset minus its accumulated depreciation. true or false?
What does it mean the "property and equipment are started at cost"? A. Fair value B.historical cost only C. Historical cost less accumulated depre
Why is depreciation expense recognized? Select one: a. To provide a better estimate of the market value of the depreciated assets. b. So that the balance sheet value of plant assets will more accurately reflect the replacement cost of the assets. c. To ensure that cash will be available at the end of the assets' useful life in order to replace it. d. To match the cost of the asset against the revenue using a reasonable allocation. method. Save AnswersNext
A) What is residual value? Support your answer with an example ( word count 100) B) In practise, would you expect the depreciation expense for a non-current asset to be overestimated or underestimated? Explain why this is the case.
97. The portion of the acquisition cost of an asset yet to be allocated is known as A. Written down value B. Accumulated value C. O Realizable value D. O Salvage value
What costs are included in determining the total cost of an asset? Why would a company include more than just the purchase price of an asset?
Which of the following costs is not typically capitalized as part of an asset’s cost? A) initial testing costs B) Purchase price of a service contract for routine maintenance costs C) Costs of insurance during the construction period D) Transportation costs while the asset was in transit E) Installation costs
What is the 'carrying amount of a depreciating non-current asset? O A. The cost (or fair value) of the asset less the accumulated depreciation on that asset O B. The current market value of the asset C. The cost (or fair value) of the asset less the current year's depreciation O D. The cost (or fair value) of the asset
A gain or loss on the sale of a plant asset is determined by comparing the: A. Asset's original cost with the sales proceeds B. Asset's book value with the sales proceeds C. Asset's original cost with the asset's book value. D. Initial estimate of the asset's salvage value with the sales proceeds. E. None of these.
Nn. 122.
3) Which of the following best describes a depreciation base?7) The acquisition cost of an asset relative to its fair value O The estimated market value of an asset at the end of its useful life O The historical cost of an asset less the depreciation recognized to date O The amount that should be expensed over an asset's useful life
A limited-life intangible is reported at its ____________. a. replacement cost b. carrying amount unless impaired c. liquidation value d. acquisition cost