Image caption True/ False 1) The term plant assets refers to long-lived assets acquired for use in

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True/ False 1) The term "plant assets" refers to long-lived assets acquired for use in business operations, rather than for resale to customers. 2) If a piece of equipment is dropped and damaged during installation, the cost of repairing the damage should be added to the cost of the equipment. 3) Sales tax on equipment is not part of the acquisition cost and should not be capitalized. Answer: 4) To "capitalize" an expenditure means to charge it to an asset account. 5) Assets are shown in the balance sheet at their book value. 6) Any rational, systematic method of depreciation is acceptable, as long as costs are allocated to expense in a reasonable manner. Multiple Choice 1) A gain is recognized on the disposal of plant assets when: A) The sales price is greater than the residual value but less than the book value. B) The sales price is less than both the book value and the residual value. C) The sales price is greater than the book value and greater than the residual value. D) The sales price is greater than the book value and less than the residual value. 2) The gain on the disposal of equipment is recognized when: A) The book value of the equipment is greater than the value гесeived. B) The book value of the equipment is less than the value тесeived. C) A salvage value exists. D) A gain should not be recognized on the disposal of an asset. 3) The entry to record amortization on a copyright would inelude True/ False 1) The term "plant assets" refers to long-lived assets acquired for use in business operations, rather than for resale to customers. 2) If a piece of equipment is dropped and damaged during installation, the cost of repairing the damage should be added to the cost of the equipment. 3) Sales tax on equipment is not part of the acquisition cost and should not be capitalized. Answer: 4) To "capitalize" an expenditure means to charge it to an asset account. 5) Assets are shown in the balance sheet at their book value. 6) Any rational, systematic method of depreciation is acceptable, as long as costs are allocated to expense in a reasonable manner. Multiple Choice 1) A gain is recognized on the disposal of plant assets when: A) The sales price is greater than the residual value but less than the book value. B) The sales price is less than both the book value and the residual value. C) The sales price is greater than the book value and greater than the residual value. D) The sales price is greater than the book value and less than the residual value. 2) The gain on the disposal of equipment is recognized when: A) The book value of the equipment is greater than the value гесeived. B) The book value of the equipment is less than the value тесeived. C) A salvage value exists. D) A gain should not be recognized on the disposal of an asset. 3) The entry to record amortization on a copyright would inelude