Test Bank all Chapters,

Fundamental Accounting Principles, Volume 2, 17e Edition By Kermit Larson

(Test Bank all Chapters, Answer at the end of each Chapter)

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Version 1 1 Chapter 9

1) Property, plant and equipment are assets held for sale.⊚ true ⊚ false

2) Non-current assets can be divided into two groups including tangible and intangible assets.These assets are generally used in operations of a business and have useful lives extending over more than one accounting period.⊚ true ⊚ false

3) Land purchased as a building site is a tangible asset called property, plant and equipment and is classified under the "Long-term Investments" section on the balance sheet.⊚ true ⊚ false

4) The cost of an asset includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.⊚ true ⊚ false

5) If a machine is damaged during unpacking, the repairs are added to its cost.⊚ true ⊚ false

6) To be charged to and reported as part of the cost of property, plant and equipment, an expenditure must be normal, reasonable, and necessary in preparing the asset for its intended use.⊚ true ⊚ false

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Version 1 2 7) The purchase of real estate that includes land, building, and land improvements is called a lump-sum purchase.⊚ true ⊚ false

8) Any expenditures for legal fees, surveying, and accrued property taxes should not be included in the cost of land.⊚ true ⊚ false

9) Revenue expenditures are additional costs of property, plant and equipment that provide material benefits extending beyond the current period.⊚ true ⊚ false

10) Revenue expenditures are expenditures to keep assets in normal operating condition.⊚ true ⊚ false

11) Capital expenditures are also called balance sheet expenditures.⊚ true ⊚ false

12) SportsWorld spent $17,000 to remodel its store. This cost will be recognized with a debit to Store Building.⊚ true ⊚ false

13) Treating small-dollar-amount capital expenditures as revenue expenditures is likely to mislead users of financial statements.⊚ true ⊚ false

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Version 1 3 14) The cost principle requires that an asset be recorded at the cash or cash equivalent amount given in exchange.⊚ true ⊚ false

15) Subsequent expenditures are purchases made after the acquisition of equipment to operate, maintain, repair, and improve it.⊚ true ⊚ false

16) Because land has unlimited life, it is not subject to depreciation. Therefore, items that increase the usefulness of the land such as parking lots are also not depreciated.⊚ true ⊚ false

17) Depreciation is the process of allocating the cost of a tangible asset in a rational and systematic manner over the asset's estimated useful life.⊚ true ⊚ false

18) Residual value is an estimate of an asset's value at the end of its useful life.⊚ true ⊚ false

19) Inadequacy refers to the condition where the capacity of a property, plant and equipment item is too small to meet the company's productive demands.⊚ true ⊚ false

20) Depreciation should always be recorded as soon as an asset is purchased.⊚ true ⊚ false

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