Question

20. Which of the following plant assets does not decline in service potential over the course of its useful life? a. Land Improvement b. Building c. Land d. Equipment 21. Concord Company purchases a new delivery truck for $54,300. The sales taxes are $3.700. The logo of the company is painted on the side of the truck for $1,600. The truck license is $170. The truck undergoes safety testing for $270. What does Concord record as the cost of the new truck? a. $58,000 b. $60,040 c. $59,600 d. $59,870

Answer 1

20) (C) Land

Explanation:

( Land does not depreciate over a period of time and continues to provide a service. Where as Building, Land Improvement and equipment depreciate over its life time hence option (c) is thn only correct answer.)

21) (D) $ 59870

Explanation:

Truck Cost	$54,300
Sales Tax	$3700
Logo	$1600
Safety testing	$270
Total Cost	$59870

Cost will includ all items which are necessary to place the truck in service.

Licence is not necessary to place the truck in service, hence it is not included.