Which one of the following characteristics is not required for an asset to be

Which one of the following characteristics is not

This preview shows page 3 - 5 out of 50 pages.

Question: 6Which one of the following characteristics is notrequired for an asset to be properly described as property, plant, and equipment? A. Held for use and not for investment. B. Newly purchased. Answer (B) is correct. These assets are known variously as property, plant, and equipment; fixed assets; or plant assets. 1. PPE are tangible. They have physical existence. 2. PPE may be either personal property (something movable, e.g., equipment) or real property (such as land or a building). 3. PPE are used in the ordinary operations of an entity and are not held primarily for investment, resale, or inclusion in another product. But they are often sold. 4. PPE are noncurrent. They are not expected to be used up within 1 year or the normal operating cycle of the business, whichever is longer. However, an asset need not be newly purchased to be properly described as property, plant, and equipment. C. Expected life of more than 1 year.
Image of page 3
ﻝﻭﺩ ﻥﻳﺗﺎﻧﻘﻟﺍ ﻰﻠﻋ ﺎﻫﻭﻗﻼﺗﺣ ﺎﻫﻭﺟﺎﺗﺣﺗ ﻲﻠﻟﺍ ﻪﻠﺋﺳﻻﺍﻭ ﺏﺗﻛﻟﺍ ﻝﻛ D. Tangible. Question: 7Equipment bought by a company 3 years ago was charged to equipment expense in error. The cost of the equipment was $100,000, with no expected salvage value and a 10-year estimated life. The company uses the straight-line depreciation method on similar equipment. The error was discovered at the end of Year 3 prior to the issuance of the company’s financial statements. After correction of the error, the correct carrying value of the equipment will be Question: 8A company uses the sum-of-the-years’-digits (SYD) method of depreciation. On January 1, the company purchased a machine for $50,000. It had an estimated life of 5 years and no residual value. Depreciation for the first year would be
Image of page 4
Image of page 5

You've reached the end of your free preview.

Want to read all 50 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture