Ch 102 - Chapter 10 Acquisition and Disposition 0(0 out of...

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0% (0 out of 21 correct) Responses to questions are indicated by the symbol. 1. The cost of driveways, walks, and parking lots are included in the cost of land. A. True B. False Such costs are included in Land Improvements. 2. Interest revenue earned on borrowed funds during the construction of an asset to be used by a firm can be used to reduce the cost of interest to be capitalized. A. True B. False Interest revenue should not be netted or offset against interest cost. 3. When nonmonetary assets are traded in an exchange that lacks commercial substance and no cash is received, any loss is recognized immediately. A. True B. False Losses that arise in an exchange of nonmonetary assets that lacks commercial substance are not deferred but recognized. 4. The receipt of an asset from a contribution should be recorded as additional paid-in capital. A. True B. False Contributions received should be recorded as revenue in the period received. 5. The cost of a replacement that extends the useful life of an asset should be debited to the asset account. 10/26/2009 Chapter 10: Acquisition and Disposition … higheredbcs.wiley.com/…/ch10.html 1/6
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A. True B. False When an asset's useful life is extended by a replacement, the cost of such replacement should be debited to the related Accumulated Depreciation account. 6. Land is only depreciated if it suffers a material decrease in value. A. True B. False Land is not subject to depreciation unless a material decrease in value occurs, such as a loss of fertility in agricultural land.
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