ch 8 sb

• Which of the following items are plant assets?

  • Equipment used in operations
  • Building used for operations
• The cost of plant assets should include all of the normal and reasonable expenditures necessary to get the asset in place and ready for its intended use, including repairs to damages incurred after installation

  False
• Alin Co. purchases a building for $300,000 and pays an additional $30,000 for title fees and lawyer fees. Alin also pays $20,000 in renovations, including painting, carpet, lighting, etc. Alin should record the cost of the building at:

  $350,000.
• Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 for taxes and lawyer fees. Geo also paid $60,000 to modify the building, changing the layout specifically for Geo's needs. Geo should record the building at $ 495,000
• Land improvements are assets that are additions to land and have limited useful lives, such as walkways and fences.
• plant assets are assets used in a company's operations that have a useful life of more than one accounting period.
• Plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. This would include which of the following costs?

  • Shipping charges
  • Assembling
  • Testing
• The cost at which a company records purchases of machinery and equipment should include which of the following?

  • Shipping fees
  • Taxes
  • Purchase price
  • Installation
• Assets that increase the benefits of land, have a limited useful life, such as parking lots and lighting systems, are called:land improvements
• Plant assets are recorded at cost, which includes all expenditures necessary to get the asset in place and ready for use. All of the following would be included as part of the cost of a plant asset except: damage done when unpacking the plant asset
• is the process of allocating the cost of a plant asset to expense while it is in use. ➢ Depreciation
• The purchase of a group of plant assets for one price is called a Blank______ purchase.lump-sum
• The factors necessary to compute depreciation include (cost/selling price/market value), salvage value and useful life.

  • cost