Question

TRUE/FALSE

1. Long-lived assets that are tangible in nature, used in the operations of the business, and not held for sale in the ordinary course of business are called fixed assets.
   1. True
   2. False
2. The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary cost to get the asset in place and ready for use.
   1. True
   2. False
3. When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account.
   1. True
   2. False
4. Land acquired as a speculation is reported under Investments on balance sheet.
   1. True
   2. False
5. To a major resort, timeshare properties would be classified as property, plant, and equipment.
   1. True
   2. False
6. Standby equipment held for use in the event of a breakdown of regular equipment is reported as property, plant, and equipment.
   1. True
   2. False
7. The cost of repairing damage to a machine during installation is debited to a fixed asset account.
   1. True
   2. False
8. During construction of a building, the cost of interest on a construction loan should be charged to and expense account.
   1. True
   2. False
9. The cost of computer equipment does not include the consultant’s fee to supervise installation of the equipment.
   1. True
   2. False
10. Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it is intended.
    1. True
    2. False
11. The normal balance of the accumulated depreciation account is debit.
    1. True
    2. False
12. As a company depreciated a piece of equipment, it cash flow goes up.
    1. True
    2. False
13. When cities give land or buildings to a company to locate in the community, no entry is made since there is no cost to the company.
    1. True
    2. False
14. All property, plant, and equipment assets are depreciated over time.
    1. True
    2. False
15. The book value of a fixed asset reported on the balance sheet represents its market value on that date.
    1. True
    2. False
16. The depreciable cost of a building is the same as its acquisition cost.
    1. True
    2. False
17. It is necessary for a company to use the same depreciation method for all of its depreciable assets.
    1. True
    2. False
18. It is not necessary for a company to use the same depreciation method for financial statements and for determining income taxes,
    1. True
    2. False
19. An estimate of the amount which an asset can be sold at the end of its useful life is called residual value.
    1. True
    2. False
20. The units of production depreciation method matches expenses against revenue the best.
    1. True
    2. False

Answer 1