Question 1

When land with an old building is purchased as a future building site, the cost of removing the old building is part of the cost of the new building.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A)  depreciated over the period from acquisition to the date the hotel is scheduled to be torn down.
B)  written off as 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.E) B) and C)
F) All of the above

Question 3

If the cost of the asset is recorded net of the government grant,

Accepted Answer

A)  equity will likely be overstated.
B)  liabilities will likely be overstated.
C)  assets will likely be understated.
D)  revenues will likely be understated.E) B) and D)
F) All of the above

Question 4

Plant assets may properly include

Accepted Answer

A)  deposits on machinery not yet received.
B)  idle equipment awaiting sale.
C)  land held for possible use as a future plant site.
D)  None of these answer choices are correct.E) A) and B)
F) A) and C)

Question 5

Assets classified as property, plant, and equipment can be either acquired for use in operations, or acquired for resale.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements is true regarding capitalization of interest?

Accepted Answer

A)  Interest cost capitalized in connection with the purchase of land to be used as a building site should be debited to the land account and not to the building account.
B)  The amount of interest cost capitalized during the period should not exceed the actual interest cost incurred.
C)  When excess borrowed funds not immediately needed for construction are temporarily invested, any interest earned should be recorded as interest revenue.
D)  The minimum amount of interest to be capitalized is determined by multiplying a weighted average interest rate by the amount of average accumulated expenditures on qualifying assets during the period.E) B) and C)
F) All of the above

Question 7

Which of these is not a major characteristic of a plant asset?

Accepted Answer

A)  Possesses physical substance
B)  Acquired for use in operations
C)  Long-term in nature
D)  All of these are major characteristics of a plant asset.E) None of the above
F) A) and B)

Question 8

Which of the following is required by IFRS?

Accepted Answer

A)  Resources acquired through government grants must be recorded at cost.
B)  Resources acquired through government grants must be recorded at fair value.
C)  Resources acquired through government grants must be accounted for using the capital approach.
D)  Resources acquired through government grants must be accounted for using the income approach.E) All of the above
F) A) and B)

Question 9

When capitalizing interest during construction of an asset, an imputed interest cost on stock financing must be included.

Accepted Answer

A) True 
 B)False

Question 10

A government grant generally subsidizes a company by transferring resources to that company.

Accepted Answer

A) True 
 B)False

Exam 10: Acquisition and Disposition of Property, Plant, and Equipment

Plant assets may properly include

Correct Answer
verified

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

Correct Answer
verified

Which of the following is required by IFRS?

Correct Answer
verified

If the cost of the asset is recorded net of the government grant,

Correct Answer
verified

When land with an old building is purchased as a future building site, the cost of removing the old building is part of the cost of the new building.

Correct Answer
verified

Which of these is not a major characteristic of a plant asset?

Correct Answer
verified

Assets classified as property, plant, and equipment can be either acquired for use in operations, or acquired for resale.

Correct Answer
verified

When capitalizing interest during construction of an asset, an imputed interest cost on stock financing must be included.

Correct Answer
verified

Which of the following statements is true regarding capitalization of interest?

Correct Answer
verified

A government grant generally subsidizes a company by transferring resources to that company.

Correct Answer
verified

Exam 10: Acquisition and Disposition of Property, Plant, and Equipment

Plant assets may properly include

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is required by IFRS?

Correct AnswerverifiedShow Answer

If the cost of the asset is recorded net of the government grant,

Correct AnswerverifiedShow Answer

When land with an old building is purchased as a future building site, the cost of removing the old building is part of the cost of the new building.

Correct AnswerverifiedShow Answer

Which of these is not a major characteristic of a plant asset?

Correct AnswerverifiedShow Answer

Assets classified as property, plant, and equipment can be either acquired for use in operations, or acquired for resale.

Correct AnswerverifiedShow Answer

When capitalizing interest during construction of an asset, an imputed interest cost on stock financing must be included.

Correct AnswerverifiedShow Answer

Which of the following statements is true regarding capitalization of interest?

Correct AnswerverifiedShow Answer

A government grant generally subsidizes a company by transferring resources to that company.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified