Chapter 8

Question 1

Plant Assets

Answer 1

Tangible long-lived assets used to produce or sell products and services; also called property, plant and equipment (PP&E) or fixed asset.
assets purchased as a group in a single transaction for a lump-sum price are allocated the purchase price based on their relative market values.

Question 2

Salvage Value

Answer 2

______ value, also called residual value or scrap value, is an estimate of the asset’s value at the end of its useful life.

Question 3

Useful

Answer 3

______ life of a plant asset is the length of time it is productively used in a company’s operations

Question 4

factors determine depreciation?

Answer 4

the cost of the asset, its estimated useful life, and its salvage value

Question 5

Book Value

Answer 5

The asset’s acquisition costs less its accumulated depreciation is called:

Question 6

Declining- balance

Answer 6

The depreciation method that determines the depreciation for the period by multiplying a depreciation rate (often twice the straight-line rate) by the asset’s beginning-period book value is known as the

Question 7

Revenues

Answer 7

expenditures are additional costs of plant assets that do not materially increase the asset’s life or capabilities.

Question 8

Betterments

Answer 8

______ are expenditures that make a plant asset more efficient or productive, but do not always increase an asset’s useful life.

Question 9

Betterments

Answer 9

Niren Co. made modifications to a manufacturing machine that increased its productivity by 40%. Niren would classify this expense as a(n):

Question 10

Ordinary Repairs

Answer 10

______ are expenditures that keep an asset in good operating condition. They are necessary if an asset is to perform to expectations over its useful life.

Question 11

Extraordinary repair

Answer 11

______ are expenditures that extend the asset’s useful life beyond its original estimate.

Question 12

Accumulated depreciation is

Answer 12

the Minus the cost and book value