California Polytechnic State University, Pomona ACC 311 Chapter 10 1)Property, plant, and equipment and intangible assets are long-term, revenue producing assets

California Polytechnic State University, Pomona

ACC 311

Chapter 10

1)Property, plant, and equipment and intangible assets are long-term, revenue producing assets.

2. Sales tax paid on equipment acquired for use in the business is not capitalized.

3. Demolition costs to remove an old building from land purchased as a site for a new building are considered part of the cost of the new building. (should be land)

4. The initial cost of property, plant, and equipment includes all the identifiable expenditures necessary to bring the asset to its desired condition and location for use.

5. A distinguishing characteristic of intangible assets is the degree of uncertainty about when or if they will provide future benefits.

6. Costs incurred after discovery of a natural resource but before production begins are reported as expenses of the period in which the expenditures are made.

7. The relative fair values are used to determine the valuation of individual assets acquired in a lump-sum purchase.

8. The fair value of the asset, debt, or equity securities given in a noncash acquisition should determine the value of the consideration received.

9. Under current GAAP, fair value is used to measure the components of all nonmonetary exchanges.

10. The interest capitalization period for a self-constructed asset ends either when the asset is substantially complete and ready for use or when interest costs no longer are being incurred.

11. The FASB's required accounting treatment for research and development costs often understates both net income and assets.

12. According to International Financial Reporting Standards, all research and development expenditures are expensed in the period incurred. (R&D distinct/)

13. A company that prepares its financial statements according to International Financial Reporting Standards must calculate amortization of capitalized software development costs in the same way as under U.S. GAAP.

14. A company that prepares its financial statements according to International Financial Reporting Standards accounts for a government grant by recognizing revenue for the amount of the grant.