Accounting for Property, Plant and Equipment
Accounting for Property, Plant and Equipment

Accounting for Property, Plant and Equipment

Lead Author(s): Saylor Academy

Source: Saylor

Student Price: FREE

This question pack looks at depreciation, assets, capital, and more in the context of property, plant, and equipment accounting.

This content is licensed under the Creative Commons Attribution 3.0 Unported License.

Accounting for Property, Plant and Equipment Question 1

Depreciation is to ______________ as amortization is to ______________.

A

inventory, patents

B

assets, liabilities

C

tangible assets, intangible assets

D

property, equipment

Accounting for Property, Plant and Equipment Question 2

How is impairment loss recorded in a T‑account for a piece of machinery equipment?

A

Credit impairment loss, debit accumulated depreciation, debit equipment, and credit equipment

B

Debit impairment loss, credit accumulated depreciation, debit equipment, and credit equipment

C

Debit impairment loss, debit accumulated depreciation, credit equipment, and credit equipment

D

Debit impairment loss, debit accumulated depreciation, debit equipment, and credit equipment

Accounting for Property, Plant and Equipment Question 3

Using, straight‑line depreciation, how much depreciation would be recorded each year for the value loss for a $10,000 school bus with a useful life of 15 years?

A

$150.00

B

$666.67

C

$1000.00

D

$1250.25

Accounting for Property, Plant and Equipment Question 4

A company is able to ______________ the cost of acquiring a resource if the resource will provide the company with a tangible benefit for more than one fiscal year. Companies ______________ costs that provide only one fiscal year's worth of benefits.

A

expense, capitalize

B

capitalize, expense

C

depreciate, expense

D

amortize, capitalize

Accounting for Property, Plant and Equipment Question 5

How are indefinite‑life intangible assets recorded on a company's balance sheet?

A

Indefinite‑life intangible assets are depreciated by using straight‑line or double declining balance methods.

B

Indefinite‑life intangible assets are written off after 10 years.

C

Indefinite‑life intangible assets are amortized like other intangible assets.

D

Indefinite‑life intangible assets are not amortized; instead, they are evaluated periodically for impairment.

Accounting for Property, Plant and Equipment Question 6

Which of the following are examples of identified intangible assets?

A

Cash and goodwill

B

Goodwill and accounts receivable

C

Copyrights and land

D

Intellectual property and copyrights

Accounting for Property, Plant and Equipment Question 7

Which of the following best describes goodwill?

A

The name, sign, symbol, or design that immediately identifies a company's product or service

B

Something of future or potential value

C

An intangible value attached to a company resulting mainly from the company's management skill or know‑how and a favorable reputation with customers

D

A responsibility that a company needs to fulfill long‑term

Accounting for Property, Plant and Equipment Question 8

Why would a company want to capitalize an intangible asset?

A

An intangible asset will provide the company with tangible benefits for one fiscal year.

B

An intangible asset will provide the company with tangible benefits for more than one fiscal year.

C

An intangible asset will eventually be converted into a tangible asset.

D

Intangible assets cannot be capitalized.

Accounting for Property, Plant and Equipment Question 9

Which of the following is NOT an example of an intangible asset?

A

Equipment

B

Goodwill

C

Copyrights

D

Patents

Accounting for Property, Plant and Equipment Question 10

Complete the following statement. A bond issued with a coupon rate higher than the current interest rate is said to be issued at:

A

a premium.

B

a discount.

C

par.

D

a declining rate.

Accounting for Property, Plant and Equipment Question 11

How are bond prices calculated?

A

Take the average of the present values of all expected coupon payments, and divide the present value of the par value at maturity.

B

Use the sum of the future values of all expected coupon payments, and add the future value of the par value at maturity.

C

Use the sum of the present values of all expected coupon payments, and add the present value of the par value at maturity.

D

None of the above

Accounting for Property, Plant and Equipment Question 12

A loan that has a payment life of 10 years is considered to be a(n) ______________ liability.

A

current

B

long‑term

C

definite‑life

D

indefinite‑life

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