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Unformatted text preview: Chapter Nine Questions 1. Define the term property, plant, and equipment. Property, plant, and equipment are resources with lives longer than one year, used in normal business operations, and that provide benefits through their physical form. 2. Identify three examples of property, plant, and equipment. Buildings, computers, trucks. 3. What is the major difference between tangible and intangible assets? Tangible assets provide benefits through their physical form, while intangible assets provide benefits in non-physical form, usually legal rights. 4. Identify two examples of intangible assets. Patents and copyrights. 5. How is the "using up" of property, plant, and equipment similar to the "using up" of supplies and insurance? The using up of property, plant, and equipment, supplies, and insurance all require the expense of such use to be recorded. 6. How is the "using up" of property, plant, and equipment different from the "using up" of supplies and insurance? Using up property, plant, and equipment differs from using up supplies and insurance because it is much more difficult to measure the amount of property, plant, and equipment used up. 7. Identify two major sources of property, plant, and equipment. Companys obtain property, plant, and equipment by converting other resources, such as cash, and by borrowing. 8. What is the name of the expense account in which the use of property, plant, and equipment is recorded? Depreciation expense. 9. What is the name of the asset account in which the amount of property, plant, and equipment that has been used up is recorded? Accumulated depreciation. 10. What are the two basic requirements for determining whether a dollar amount should be reported as part of property, plant, and equipment? The dollar amount must benefit more than one accounting period and must be necessary to get the asset ready for use. 11. The total dollar amount of property, plant, and equipments depreciation expense is the difference between what two items? Cost - residual value = total depreciation expense. 12. Define the term residual value or salvage value. Residual value is the dollar amount a company expects to receive when it disposes of an asset. 13. Identify one important way in which the accounting for land differs from the accounting for buildings or equipment. Because land values have not decreased significantly over time, land is not depreciated, while buildings and equipment are depreciated. 14. Define the term useful life. Useful life is the number of years an asset is expected to be used. 15. What is the purpose all depreciation methods are attempting to accomplish? Depreciation methods attempt to determine the dollar amount of depreciation expense to record in each year of an assets life....
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- Spring '11
- Financial Accounting