Chapter 10

Chapter 10 - Chapter 10 1 Which one of the following is not a characteristic of property plant and equipment A They are acquired for use in

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Chapter 10 1. Which one of the following is not a characteristic of property, plant, and equipment? A. They are acquired for use in operations. B. They are long-term in nature and are always subject to depreciation. C. They possess physical substance. D. All of the options are characteristics. 2. Land costs include all of the following except: A. closing costs such as attorney's fees. B. assumption of any liens and mortgages. C. special assessments for street lights. D. All of the options are land costs. 3. The cost of buildings should include all of the following except: A. building permits. B. excavation costs. C. overhead costs incurred during construction. D. costs of removing an old building on the new building site. 4. Overhead costs related to self-constructed assets are accounted for by: A. allocating overhead on the basis of lost production. B. assigning a portion of all overhead to the asset. C. assigning no fixed overhead to the asset. D. assigning a pro rata portion of fixed overhead to the asset. 5. The approach for interest costs incurred during construction recommended under GAAP is to: A. capitalize no interest charges during construction. B. charge construction with all costs of funds employed, whether identifiable or not. C. capitalize only the actual costs incurred during construction. D. capitalize a pro rata portion of all costs of funds employed. 6. The interest capitalization period begins when:
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A. activities to get the asset ready for its intended use are in progress. B. expenditures for the asset have been made. C. interest cost is being incurred. D. All of the options are necessary. 7. The interest rate(s) used in computing avoidable interest is the: A. rate incurred on specific borrowings. B. weighted average rate incurred on all other outstanding debt. C. lower of the rate incurred on specific borrowings or the weighted average rate. D. rate incurred on specific borrowings for the weighted-average expenditures equal to the specific borrowings and the weighted average rate of other borrowings for the excess expenditures. 8. Plant assets purchased in exchange for a zero-interest-bearing note should be accounted for at the: A. face value of the note. B. fair value of the asset received.
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This note was uploaded on 12/09/2011 for the course ACC 371 taught by Professor Proscott during the Spring '11 term at S. Alabama.

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Chapter 10 - Chapter 10 1 Which one of the following is not a characteristic of property plant and equipment A They are acquired for use in

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