Question 1

When constructing a building for plant operations,payments for materials,labor,and miscellaneous costs are recorded as expenses.

Accepted Answer

When constructing a building for plant operations,the cost for materials,labor,and miscellaneous costs are recorded as part of the cost of the building.

Question 2

An expenditure that increases the capacity or efficiency of a plant asset or that extends the asset's life is known as a revenue expenditure.

Accepted Answer

An expenditure that increases the capacity or efficiency of a plant asset or that extends the asset's life is known as a capital expenditure.

Question 3

Great Plains Corporation has acquired a property that included both land and a building for $500,000.The corporation paid cash.The corporation hired an appraiser who has determined that the market value of the land is $300,000 and that of the building is $400,000.Journalize the lump-sum purchase.Omit explanation.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accepted Answer

The answer of Great Plains Corporation has acquired a property...

Question 4

A lump-sum purchase or basket purchase involves paying a single price for several assets as a group.

Accepted Answer

A lump-sum purchase or basket purchase involves paying a single price for several assets as a group.

Question 5

The cost paid to a laborer to assemble a desk is recorded as an expense.

Accepted Answer

The cost paid to a laborer to assemble a desk is recorded as part of the asset,furniture.

Question 6

After a machine is installed and is up and running,repairs and maintenance are recorded as part of the cost of the machine.

Accepted Answer

After a machine is installed and is up and running,repairs and maintenance are recorded as expenses.

Question 7

Ordinary repairs to plant assets are referred to as revenue expenditures.

Accepted Answer

Ordinary repairs to plant assets are considered revenue expenditures as they are recurring expenses meant to maintain the plant asset's normal operating condition and do not extend the asset's useful life beyond its original estimate.

Question 8

For each of the following amounts paid by a purchaser,determine whether the amount is debited to Land,Land Improvements,or Building.

Accepted Answer

The answer of For each of the following amounts paid...

Question 9

The cost of furniture and fixtures includes all costs to ready the asset for its intended use.

Accepted Answer

The cost of furniture and fixtures includes not only the actual cost of the asset but also any costs associated with installation, delivery, assembly, and other preparations necessary to make the asset usable for its intended purpose.

Question 10

Which of the following is NOT recorded as the cost of a building?

Accepted Answer

B)Fencing is a land improvement.

Question 11

Anderson Corporation has purchased a group of assets for $20,300.The assets and their relative market values are listed below.

Which of the following amounts would be debited to the Land account? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accepted Answer

B)Cost of land = Lump-sum purchase price × [Land / (Land + Equipment + Building)] =
$20,300 ×[ $6800 / ($6800 + $2300 + $3600)] = $10,962

Question 12

Danube Corp.purchased a used machine for $21,000.The machine required installation costs of $6000 and insurance while in transit of $1800.At which of the following amounts would the machine be recorded?

Accepted Answer

D)
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Question 13

The lump-sum amount paid for a group of assets is divided among the acquired assets based on their relative market values.

Accepted Answer

This process is known as allocation of purchase price, where the purchase price is allocated among the assets based on their fair market values.

Question 14

Installation costs are recorded as part of the cost of equipment.

Accepted Answer

Installation costs are necessary for the equipment to be fully functional and therefore are considered part of the overall cost of the equipment.

Question 15

If a minor repair was incorrectly debited to the asset account,expenses and net income would be understated.

Accepted Answer

If a minor repair was incorrectly debited to the asset account,expenses and net income would be understated and net income would be overstated.

Question 16

Millburn Corporation has acquired a property that included both land and a building for $510,000.The corporation hired an appraiser who has determined that the market value of the land is $320,000 and that of the building is $440,000.At what amount should the corporation record the cost of land? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accepted Answer

D)Land percentage of total value = 320,000 / (320,000 + 440,000)= 0.42
Cost of land = Lump-sum purchase price × Land percentage of total value = $510,000 × 0.42 = $214,200

Question 17

Brentwood Auto Repair purchased a new machine and placed it in service on June 14.Which of the following is NOT included in the cost of equipment?

Accepted Answer

The answer of Brentwood Auto Repair purchased a new machine...

Question 18

Which of the following is NOT included as furniture and fixtures?

Accepted Answer

Computers are considered office equipment, not furniture and fixtures. Furniture and fixtures refer to physical items such as desks, chairs, tables, cabinets, and other furnishings used in a business.

Question 19

Laramie Corporation has acquired a property that included both land and a building for $560,000.The corporation hired an appraiser who has determined that the market value of the land is $370,000 and that of the building is $440,000.At what amount should the corporation record the cost of the building? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accepted Answer

B)Building percentage of total value = 440,000 / (370,000 + 440,000)= 0.54
Cost of building = Lump-sum purchase price x Building percentage of total value =
$560,000 × 0.54 = $302,400

Question 20

Repair work that generates a capital expenditure because it extends a plant asset's useful life past the normal expected life is known as an extraordinary repair.

Accepted Answer

An extraordinary repair is a repair that extends the useful life of a plant asset beyond its normal expected life and thus generates a capital expenditure.

Quiz 9: Plant Assets, natural Resources, and Intangibles

When constructing a building for plant operations,payments for materials,labor,and miscellaneous costs are recorded as expenses.

An expenditure that increases the capacity or efficiency of a plant asset or that extends the asset's life is known as a revenue expenditure.

A lump-sum purchase or basket purchase involves paying a single price for several assets as a group.

The cost paid to a laborer to assemble a desk is recorded as an expense.

After a machine is installed and is up and running,repairs and maintenance are recorded as part of the cost of the machine.

Ordinary repairs to plant assets are referred to as revenue expenditures.

For each of the following amounts paid by a purchaser,determine whether the amount is debited to Land,Land Improvements,or Building.

The cost of furniture and fixtures includes all costs to ready the asset for its intended use.

Which of the following is NOT recorded as the cost of a building?

Danube Corp.purchased a used machine for $21,000.The machine required installation costs of $6000 and insurance while in transit of $1800.At which of the following amounts would the machine be recorded?

The lump-sum amount paid for a group of assets is divided among the acquired assets based on their relative market values.

Installation costs are recorded as part of the cost of equipment.

If a minor repair was incorrectly debited to the asset account,expenses and net income would be understated.

Brentwood Auto Repair purchased a new machine and placed it in service on June 14.Which of the following is NOT included in the cost of equipment?

Which of the following is NOT included as furniture and fixtures?

Repair work that generates a capital expenditure because it extends a plant asset's useful life past the normal expected life is known as an extraordinary repair.