This document appears to be a multiple choice test over accounting concepts related to property, plant, and equipment (PPE). It includes 20 multiple choice questions testing understanding of topics like: what costs can be included in the value of land and self-constructed assets, how to account for purchases and exchanges of PPE, capital vs expense treatment of improvements or repairs to existing assets, and measurement of PPE acquired through non-cash means like the issuance of shares or receipt of a donation. The test examines both recognition and measurement of transactions involving PPE from acquisition through disposal.
This document appears to be a multiple choice test over accounting concepts related to property, plant, and equipment (PPE). It includes 20 multiple choice questions testing understanding of topics like: what costs can be included in the value of land and self-constructed assets, how to account for purchases and exchanges of PPE, capital vs expense treatment of improvements or repairs to existing assets, and measurement of PPE acquired through non-cash means like the issuance of shares or receipt of a donation. The test examines both recognition and measurement of transactions involving PPE from acquisition through disposal.
This document appears to be a multiple choice test over accounting concepts related to property, plant, and equipment (PPE). It includes 20 multiple choice questions testing understanding of topics like: what costs can be included in the value of land and self-constructed assets, how to account for purchases and exchanges of PPE, capital vs expense treatment of improvements or repairs to existing assets, and measurement of PPE acquired through non-cash means like the issuance of shares or receipt of a donation. The test examines both recognition and measurement of transactions involving PPE from acquisition through disposal.
This document appears to be a multiple choice test over accounting concepts related to property, plant, and equipment (PPE). It includes 20 multiple choice questions testing understanding of topics like: what costs can be included in the value of land and self-constructed assets, how to account for purchases and exchanges of PPE, capital vs expense treatment of improvements or repairs to existing assets, and measurement of PPE acquired through non-cash means like the issuance of shares or receipt of a donation. The test examines both recognition and measurement of transactions involving PPE from acquisition through disposal.
GENERAL INSTRUCTIONS: On the space provided before each number, write the CAPITAL LETTER of the best answer. STRICTLY NO ERASURE OR ALTERATION. 1. Plant assets may properly include a. deposits on machinery not yet received c. land held for possible use as a future plant site b. idle equipment awaiting sale d. none of these. 2. Which of the following is not a major characteristic of a plant asset? a. Possesses physical substance c. Acquired for use b. Acquired for resale d. Yields services over a number of years 3. Cotton Hotel Corporation recently purchased Holiday Hotel and the land on which it is located with the plan to tear down the Holiday Hotel and build a new luxury hotel on the site. The cost of the Holiday Hotel should be a. depreciated over the period from acquisition to the date the hotel is scheduled to be torn down b. written off as an extraordinary loss in the year the hotel is torn down c. capitalized as part of the cost of the land d. capitalized as part of the cost of the new hotel. 4. The cost of land does not include a. costs of improvements with limited lives c. costs of removing old buildings b. costs of grading, filling, draining, and clearing d. special assessments 5. The cost of land typically includes the purchase price and all of the following costs except a. grading, filling, draining, and clearing costs c. private driveways and parking lots b. street lights, sewers, and drainage systems cost d. assumption of any liens or mortgages on the property 6. If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on a. the significance of the cost allocated to the building in relation to the combined cost of the lot and building b. the length of time for which the building was held prior to its demolition c. the contemplated future use of the parking lot d. the intention of management for the property when the building was acquired 7. The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to a. the machinery account b. a separate deferred charge account c. miscellaneous tax expense (which includes all taxes other than those on income) d. accumulated depreciation—machinery 8. Fences and parking lots are reported on the balance sheet as a. current assets c. land b. land improvements d. property and equipment. 9. Historical cost is the basis advocated for recording the acquisition of property, plant, and equipment for all of the following reasons except a. at the date of acquisition, cost reflects fair market value b. property, plant, and equipment items are always acquired at their original historical cost c. historical cost involves actual transactions and, as such, is the most reliable basis d. gains and losses should not be anticipated but should be recognized when the asset is sold 10. Which of the following costs are capitalized for self-constructed assets? a. Materials and labor only c. Materials and overhead only b. Labor and overhead only d. Materials, labor, and overhead 11. The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset and the exchange has commercial substance is usually recorded at a. the fair value of the asset given up, and a gain or loss is recognized b. the fair value of the asset given up, and a gain but not a loss may be recognized c. the fair value of the asset received if it is equally reliable as the fair value of the asset given up d. either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company.
12. The King-Kong Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is not expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will a. be reported in the Other Revenues and Gains section of the income statement b. effectively reduce the amount to be recorded as the cost of the new asset c. effectively increase the amount to be recorded as the cost of the new asset d. be credited directly to the owner's capital account 13. When a plant asset is acquired by issuance of ordinary shares, the cost of the plant asset is properly measured by the a. par value of the shares c. book value of the shares b. stated value of the shares d. market value of the shares 14. When a closely held corporation issues preference shares for land, the land should be recorded at the a. total par value of the shares issued c. total liquidating value of the shares issued b. total book value of the shares issued d. fair market value of the land
15. Accounting recognition should be given to some or all of the gain realized on a nonmonetary exchange of plant assets except when the exchange has a. no commercial substance and additional cash is paid c. commercial substance and additional cash is paid b. no commercial substance and additional cash is received d. commercial substance and additional cash is received 16. For a nonmonetary exchange of plant assets, accounting recognition should not be given to a. a loss when the exchange has no commercial substance b. a gain when the exchange has commercial substance. c. part of a gain when the exchange has no commercial substance and cash is paid d. part of a gain when the exchange has no commercial substance and cash is received 17. When an enterprise is the recipient of a donated asset, the account credited may be a a. share capital account c. deferred revenue account b. revenue account d. all of these 18. An improvement made to a machine increased its fair market value and its production capacity by 25% without extending the machine's useful life. The cost of the improvement should be a. Expensed c. capitalized in the machine account b. debited to accumulated depreciation d. allocated between accumulated depreciation and the machine account 19. Which of the following is not a capital expenditure? a. Repairs that maintain an asset in operating condition c. A betterment b. An addition d. A replacement 20. An expenditure made in connection with a machine being used by an enterprise should be a. expensed immediately if it merely extends the useful life but does not improve the quality b. expensed immediately if it merely improves the quality but does not extend the useful life c. capitalized if it maintains the machine in normal operating condition d. capitalized if it increases the quantity of units produced by the machine
