CHAPTER 9 - ACCOUNTING FOR NON-CURRENT ASSETS

All fixed assets(plant assets) must be depreciated for accounting purposes.

• TRUE

• FALSE

Land improvements such as drainage cost, fencing cost and etc. are generally charged to the Land account.

• TRUE

• FALSE

Once cost is established for a fixed asset, it becomes the basis of accounting for the asset especially in computing current depreciation expense.

• TRUE

• FALSE

The book value of a fixed asset is always equal to its fair market value.

• TRUE

• FALSE

Additions and improvements to a fixed asset that increase the asset's operating efficiency, productive capacity, or expected useful life are recorded as operational expenses for the current period.

• TRUE

• FALSE

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership of the fixed asset.

• TRUE

• FALSE

Recording depreciation on fixed assets affects both the Statement of Profit or Loss and the Statement of Financial Position.

• TRUE

• FALSE

Recording depreciation each period is an application of the expense recognition concept/principle.

• TRUE

• FALSE

Once an asset is fully depreciated, no additional depreciation can be taken even though the asset is still being used by the business.

• TRUE

• FALSE

If the cash proceeds from the sale of a fixed asset exceed its book value, a gain on disposal occurs.

• TRUE

• FALSE