New Chapter 9

Question 1

What are plant assets?

Answer 1

1. ) Assets that have physical substance
2. ) They are used in operations
3. ) Not intended for sale

Question 2

What are plant assets required to follow?

Answer 2

The historical cost principle

Question 3

What are capital expenditures vs. Revenue expenditures?

Answer 3

Revenue expenditures: are like simple repairs to keep the asset going forward. (required for it to work)

Question 4

What are the two associated costs with assets?

Answer 4

1. ) Cost to acquire

2. ) Accumulated depreciation

Question 5

What things are factored into the price of land?

Answer 5

1.) cash purchase price
2.) closing costs, (Title, attorney’s fees)
3.) Real estate brokers ‘ commissions
4.) Accrued property taxes
Lee must be accrued.
examples of associated capital expenditures with land: driveways, parking lots, fences, land scupping, and underground sprinklers. (not included in the land account)

Question 6

What things are factored into the price of building?

Answer 6

• Purchase of the building or construction of the building.
  • closing costs, attorney’s fees, title insurance, real estate broker’s commission.
  • Remodel/Replace repairing the roof, floors, electrical wiring, Pluming.
  • any associated construction costs: contract price; architect fee’s, building Permits,
  excavation costs.

Question 7

What things are factored into the price of equipment?

Answer 7

☑ Cash Price + Sales tax
☑ Fright charges
☑ insurance during transit
☑ expenditures related to assembling, installing, and testing the unit.

Question 8

Can all PP & E depreciate?

Answer 8

no, Land Cannot depreciate

Question 9

Ordinary repairs: ?

Answer 9

Are carried out to maintain the operating efficiency.