Which of the following is not a plant asset?
a) Equipment
b) Building
c) Land
d) Copyright
The Correct Answer and Explanation is:
The correct answer is d) Copyright.
Explanation:
In accounting, plant assets (also referred to as fixed assets) are long-term tangible assets that a business uses in its operations to produce income. These assets are expected to provide benefits over a period of time, typically longer than one year. Plant assets are physical in nature and are essential for the company’s operations. Examples include equipment, buildings, and land.
Let’s review each option to understand why copyright is not a plant asset:
- Equipment (a): Equipment is a classic example of a plant asset. It refers to tangible assets used in the production of goods or services, such as machinery, computers, or tools. Equipment is expected to provide long-term benefits to the company and is depreciated over its useful life (except land).
- Building (b): A building is another example of a plant asset. It is a physical structure used for business operations, such as an office, warehouse, or factory. Buildings also have a long-term benefit to a company and are depreciated over time, except for the land it sits on.
- Land (c): Land is a plant asset as well. It is considered a non-depreciable asset because its value does not decrease over time (in contrast to buildings, equipment, etc.). However, it is still classified as a plant asset because it is a tangible resource used in operations, such as for development or expansion.
- Copyright (d): Copyright, on the other hand, is an intangible asset. Intangible assets are non-physical assets that provide long-term value, such as intellectual property (e.g., patents, trademarks, and copyrights). Copyrights protect original works of authorship and are amortized over their useful life, but they are not classified as plant assets. They do not involve physical items used in day-to-day operations like buildings or equipment.
Thus, copyright is classified as an intangible asset, not a plant asset.