Chapter 4: Fixed Assets

Question 1

PPE

Answer 1

Property plant and equipment, tangible fixed assets

Reported according to: purchase price + required cost for making the source useful

Question 2

Cost of an asset

Answer 2

Consists of the sum of all costs incurred to make the asset ready to function

Question 3

Lump sum purchases

Answer 3

Companies buy assets as a whole

Question 4

Relative sales value method

Answer 4

Share of an asset at the total market value is used to calculate the cost price for every asset

Question 5

Incurred cost only shown on balance sheet it:

Answer 5

provides added value to the asset

shown on income statement

Question 6

Depreciation

Answer 6

Certain asset decreases in value

Question 7

3 types of depreciation

Answer 7

1. Depreciation - long living assets
2. Amortisation - intangibles
3. Depletion - mineral resources