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Statement 1 Proceeds obtained in the process of readying land for its intended purpose, such as from the sale of cleared timber, should be recognized immediately as income Statement 2 Loss on construction is part of the cost of the new building 0 Statemon is true 0 Statement 2 is true 0 Both are true 0 Both are false Statement 1 The cost of [and does not include special assessments. Statement 2 The cost of land typically includes the purchase price and assumption of any liens or mortgages on the property. 0 Statement 1 is True 0 Statemm 2 is true 0 Both are mu: O Both are false Statement '1 A company purchased land to be used as the site for the construction of a plant. Timber was cut from the building site so that construction of the plant could begin. The proceeds from the sale of the timber should be deducted from the cost of Plant Statement 2 An item of Property. plant 8; equipment shall be recognized as an asset when It is probable that future economic benets associated with the asset will ow to the entity and The cost of an asset can be measured reliably 0 Only stenement 1 is true 0 Only Statement 2 is hue 0 Both are true 0 Both are false Identify which part of the cost of each item. * Land Land None of Building Equipment/Machinery Improvement these Fences O O O O O Interest on building construction O O O O O loan Unpaid (past) property taxes assumed on O O O O O land Option cost of the land O O O O O acquired Cost of trial runs for O O O O O machinery Parking lots O O O O O Special Assesment O O O O Electricity used by a machine O O O O O Cost of tearing down a building when land and a O O O O O building on it are purchased Cost to install a machine O O O O O 2True or False * True False When capitalizing interest during construction of an asset, an imputed interest cost on O O stock financing must be not be included. Companies should assign no portion of fixed overhead to O O self-constructed assets. Variable overhead costs incurred to self-construct an asset should not be included in O O the cost of the asset. Special assessments for local improvements such as street lights and sewers should be O O accounted for as land. Insurance on equipment purchased, while the equipment is in transit, is an expense O O outright. The cost of land does not include costs of improvements O O with limited lives. Plant assets may properly include idle equipment awaiting O O sale. Assets classified as Property, Plant, and Equipment can be either acquired for use in O O operations, to earn rental or for capital appreciation Assets classified as Property, Plant, and Equipment must be long-term in nature, depreciable O O and possess physical substance. When land with an old building is purchased as a future building site, the cost of O O removing the old building is part of the cost of the LandStatement '1 The cost of PPE should include the purchase price without a deduction for trade discounts Statement 2 All costs incurred in the construction of a plant building, from excavation to completion. should be considered as part of the asset's cost Statemeht1 is We Statement 2 is trUe Both are one Both are false 0000 Choose which is included as PPE * O A machine bought for resale to a customer 0 A machine bought for Use in more than one accounting period 0 Computer softWare bought for use in more than one accounting period O A machine bought for use during a single accounting period Which of the following should not be included as part of the cost of a depreciable PPE? 0 Freight costs to ship new equipment to the company's facility. 0 Costs to level land to make it Usable for the company's purposes. 0 Actual interest costs incurred during the constru ction of a new building. O Costs to construct a driveway on the company's property. Statement 1 Land leased out for another company is part of PPE Statement 2 Machine for rentals to others is part of PPE O Statement 1 is true O Statement 2 is true O Both are true O Bothe are False Statement 1 An machine set aside to be sold within a year does not qualify as PPE Statement 2 A bearer plant is actually part of PPE O Statement 1 is true O Statement 2 is true O Both are true Both are false Statement 1 PAS 16 applies to bearer plants but it does not apply to the produce on bearer plants. Statement 2 Costs of employee benefits arising directly from the construction or acquisition of the item of property, plant and equipment is an example of direct attributable cost Statement 1 is True O Statement 2 is True O Both are true O Both are false Statement 1 A real estate company's land for sale is part of inventory and not PPE Statement 2 Decommissioning Cost is part of the initial cost of the PPE, if applicable Statement 1 is true O Statement 2 is true Both are true O Both are false 5