Title: Accounting Chapter 10 Questions Flashcards | Quizlet
Headings: Accounting Chapter 10 Questions
Accounting Chapter 10 Questions
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Plant assets may properly include
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None of these
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Which of the following is not a major characteristic of a plant asset
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Acquired for resale
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Terms in this set (35)
Plant assets may properly include
None of these
Which of the following is not a major characteristic of a plant asset
Acquired for resale
Which of these is not a major characteristic of a plant asset
All of these are major characteristics of a plant asset
Cotton Hotel Corporation recently purchased Emporia Hotel and the land on which it is located with the plan to tear down the Emporia Hotel and build a new luxury hotel on the site. The cost of the Emporia Hotel should be: Capitalized as part of the cost of the land
The cost of land does not include
Costs of improvements with limited lives
The cost of land typically includes the purchase price and all of the following costs EXCEPT
Private driveways and parking lots
If a corporation purchases a lot and building and subsequently tears down the building and sues the property as a parking lot, the proper accounting treatment of the cost of the building would depend on
The intention of management for th property when the building is acquired
The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to
The machinery account
Fences and parking lots are reported on the balance sheet as
Land improvements
Historical cost is the basis advocated for recording the acquisition of property, plant, and equipment for all the following reasons except: Property, plant, and equipment items are always acquired at their original historical cost
To be consistent with the historical cost principle, overhead costs incurred by an enterprise constructing its own building should be
Allocated on a pro rata basis between the asset and normal operations
Which of the following costs are capitalized for self-constructed assets
Materials, labor, and overhead
Which of the following assets do not qualify for capitalization of interest costs incurred during construction of the assets
Assets not currently undergoing the activities necessary to prepare them for their intended use
Assets that qualify for interest cost capitalization include
Assets under construction for company's own use
When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to
The portion of total interest cost which would not have been inc urged if expenditures for asset construction had not been made
The period of time during which interest must be capitalized ends when
The asset is substantially complete and ready or its intended use
Which the following statements is true regarding capitalization of interest
The amount of interest cost capitalized during the period should not exceed the actual interest cost incurred
Construction of a qualifying asset is started on april 1 and finished on december 1. The fraction used to multiply an expenditure made on april 1 to find weighted average accumulated expenditures is
8/12
When funds are borrowed to pay for construction of assets that qualify for capitalization of interest, the excess funds not needed to pay for construction may be temporarily invested in interest-bearing securities. Interest earned on these temporary investments should be
Recognized as revenue for the period
Interest cost that is capitalized should
None of these
Which of the following is not a condition that must be satisfied before interest capitalization can begin on a qualifying asset
the interest rate is equal to or greater than the company's cost of capital
Which of the following is the recommended approach to handling interest incurred in financing the construction of property, plant, and equipment
Capitalize only the actual interest costs incurred during construction
Which of the following nonmonetary exchange transactions represents a culmination of the earning process? Exchange of assets with a difference in future cash flows
When boot is involved in an exchange having commercial substance
Gains or losses are recognized in their entirety
The cost of a non monetary asset acquired in exchange for another non monetary asset and the exchange has commercial substance is usually recorded at
The fair value of the asset given up and a gain or loss is recognized
Ringler Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange.