To be included in property, plant, and equipment, an asset must have all of the following except a. the asset must have an expected life of a normal operating cycle. b. the asset must be held for use. c. the asset must be tangible in nature. d. the asset must have an expected life of more than one year.

To be included in property, plant, and equipment, an asset must have all of the following except a. the asset must have an expected life of a normal operating cycle. b. the asset must be held for use. c. the asset must be tangible in nature. d. the asset must have an expected life of more than one year.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The balance in the Accumulated Depreciatin account represents: A) The amount charged to expense in the current period B) A Contra-expense account C) A Cash fund to be used to replace plant assets D) The amount charged to depreciation expense since the acquisition of the plant asset
Expenditure on existing property, plant and equipment may be capitalized (recognized as an increase to the carrying amount of the asset): Choices: only if the service potential of the asset is improved. only if the useful life of the asset is extended. if the cost is material. If the cost is immaterial and the asset has not been fully depreciated.
In computing depreciation, salvage value is which of the following? subtracted from accumulated depreciation to determine the plant asset's depreciable cost. an estimate of a plant asset's value at the end of its useful life. ignored in all the depreciation methods. the fair value of a plant asset on the date of acquisition.
An intangible asset with a finite useful life should be amortised over: O a. A period at the discretion of management. O b. Its expected useful life. OC Five years. O d. No foreseeable limit.
Explain the appropriate accounting treatment required when a change is made in the service life or residual value of property, plant, and equipment and intangible assets.
Select all items which are correct. Land is listed on the depreciation schedule although it is not depreciated because it is an asset. Land is listed on the depreciation schedule because land is an asset depreciated- like buildings and equipment. Under both GAAP and tax law, depreciation of an asset begins when the asset has been acquired and placed in service. Under both GAAP and tax law, depreciation of an asset begins when the asset has been acquired- no matter if the asset has been placed in service.
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
An asset classified as property, plant, and equipment on the balance sheet must have which one of the following characteristics? a. it must have an expected life of more than one year b. it must be held for use in the normal course of business c. it must be tangible in nature d. all of the above
Characteristics of intangible assets include all of the following except: Lack physical substance Expected to generate revenues in the future All have an indefinite useful life Expected to generate revenue for more than one year
PAS 16 requires that revaluation surplus resulting from initial revaluation property, plant and equipment should be treated in one of the following ways. Which of the four options mirrors the requirements of PAS 16? a. Released to the income statement an amount equal to the difference between the depreciation calculated on historical cost vis-à-vis revalued amount. b. Debited to the class of property, plant and equipment that is being revalued and credited to a reserve captioned “revaluation surplus” which is presented under “equity”. c. Deducted from current assets and added to the property, plant, and equipment. d. Credited to retained earnings as this is an unrealized gain.
The asset's recoverable value is calculated in accordance with IFRS as
The purpose of the depreciation adjustment is to: -spread the cost invested in an asset over its useful life. -show the current market value of the asset. -set up a reserve fund for purchasing a new asset. -expense the full amount of the asset in the year purchased.

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	a.	the asset must have an expected life of a normal operating cycle.
	b.	the asset must be held for use.
	c.	the asset must be tangible in nature.
	d.	the asset must have an expected life of more than one year.