CHAPTER 10 QUIZ

What are the three characteristics of plant assets?

• Physical substance, used in operations, and intended for sales

• Physical substance, used in operations and not intended for sales

• No physical substance, used in operations, and intended for sale

• No physical substance, used in operations and not intended for sale

Expense (depreciate) the cost of land improvements over their useful lives.

• TRUE

• FALSE

What is the historical cost principle in accounting for plant assets?

• Record plant asset at market value

• Record plant asset at cost

• Record plant assets at depreciated value

• Record plant asset at salvage value

What is the difference between land improvements and land?

• Land improvements have a limited useful life, while land does not

• Land improvements are not depreciated, while land is

• Land improvements are amortized, while land is

• Land improvements are not capitalized, while land is

Depreciation is the process of allocating the cost of plant assets over their useful life

• TRUE

• FALSE

The straight line method of depreciation is based on usage

• TRUE

• FALSE

Depletion is the allocation of the cost of natural resources over their useful life, and is often calculated using the _______________ method.

What is goodwill in accounting for intangible assets?

• The excess of cost over the fair value of net assets acquired

• The cost of acquiring and defending a patent

• The cost of registering a trademark

• The cost of purchasing a franchise

What is the purpose of amortization in accounting for intangible assets?

• To allocate the cost of intangible assets over their useful life

• To match the cost of intangible assets with revenue

• To determine the market value of intangible assets

• To calculate the salvage value of intangible assets

Research and development costs are __________ when incurred, whether the research and development is successful or not