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Exam 9: Property, Plant and Equipment and Intangibles

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Question 21

Multiple Choice

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Property, plant and equipment include:

A) Buildings.
B) Machinery and equipment.
C) Land.
D) Land improvements.
E) All of these answers are correct.

F) A) and B)
G) A) and C)

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Question 22

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The most frequently used method of depreciation is the straight-line method.

A) True
B) False

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Question 23

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Non-current assets are any liabilities that are used in the operations of a business.

Treating low-cost asset purchases as expenses is allowed by which principle?

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.

Depreciation is usually recorded:

SportsWorld uses straight-line depreciation for a piece of equipment that cost $12,000, had a salvage value of $2,000, and a five-year service life. At the end of the first year, an impairment loss of $2,000 was recognized on the asset. Calculate the amount ofdepreciation expense for each of the remaining years of the asset's useful life.

A depreciable asset that is purchased on March 18 would be depreciated for ninemonths of the first year, if the fiscal year ends on December 31 using nearest whole month method.

When assigning values to an exchange of assets you should use the fair value of the asset given up.

Revenue expenditures are expenditures to keep assets in normal operating condition.

Depreciation measures the decline in market value of an asset.

The cost of an asset plus its accumulated depreciation equals the asset's book value.

SportsWorld purchased equipment costing $10,000. The equipment has a residual value of $1,000, and an estimated useful life of 5 years or 36,000 shoes. Actual unitsproduced during the year were 7,000 units. Calculate annual depreciation using the straight line method.

Capital expenditures are also called balance sheet expenditures.

The Income Tax Act requires that companies use a declining-balance method forcalculating the maximum capital cost allowance that may be claimed in any period.

Natural resources:

Legal permissions for the extraction of oil and gas from the earth are known as:

Inadequacy refers to:

A method that allocates an equal portion of the total depreciation for a property, plant and equipment asset to each accounting period during its useful life is called:

Property, plant and equipment are assets held for sale.