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Learning Objective 9-1 1) Plant assets long-lived, tangible assets used in

Question : Learning Objective 9-1 1) Plant assets long-lived, tangible assets used in : 1412220

 

Learning Objective 9-1

 

1) Plant assets are long-lived, tangible assets used in the operation of a business.

 

2) The process of allocating the cost of a plant asset over its useful life is known as cost reduction.

 

3) The cost principle requires a business to record the assets acquired or services received at their actual cost.

 

4) The cost of land does not include the cost of fencing and paving the land.

 

5) Capitalizing the cost of an asset involves crediting the asset account.

 

6) Land and land improvements are one and the same and therefore must be recorded in single account.

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

 

8) The lump-sum amount paid for a group of assets is divided among the assets acquired based on their relative market values. This method is known as the relative-market-value method.

 

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

 

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

 

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

 

12) The cost of a building depends on whether the company is constructing the building by itself or is acquiring an existing one.

 

 

 

 

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