Accounting Principles 7th Canadian Edition Volume 1 By Jerry – Test Bank

1. All long-lived assets must be depreciated for accounting purposes.

Answer: False

Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting

2. All long-lived assets which are included in property, plant, and equipment must be used in the operations of the business.

Answer: True

Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting

3. If long-lived assets are intended for sale, they are included in property, plant, and equipment.

Answer: False

Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting

4. If an item of property, plant, and equipment is recognized as an asset it is probable that the company will NOT receive economic benefits from the item.

Answer: False

Bloomcode: Knowledge
Difficulty: Hard
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting

5. Any non-refundable taxes incurred on the acquisition of an asset would be expensed at the time of acquisition.

Answer: False

Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting

6. The expenditures necessary to bring the asset to the location and condition necessary to make it ready for its intended use would be included in the cost of the asset.

Answer: True

Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting

7. Costs that benefit future periods are included in a long-lived asset account, and are called operating expenses.

Answer: False

Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting

8. If insurance is incurred transporting the asset to its final position, this insurance will be added to the cost of the asset.

Answer: True

Bloomcode: Knowledge
Difficulty: Medium
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting

9. Subsequent to the acquisition of an asset, insurance costs would be added to the cost of the asset.

Answer: False

Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting

10. If paid by the purchaser, freight charges and insurance during transit are included in the cost of equipment.

Answer: True

Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting

11. Architect’s fee for the plans for a new building would be included in the cost of the land improvements.

Answer: False

Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Calculate the cost of property, plant, and equipment.
Section Reference: Property, Plant, and Equipment
CPA: Financial Reporting