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Financial Accounting, 7e Harrison/Horngren Test Item File Chapter 7: Plant Assets Intangibles 7.1-1 The cost of any plant asset is the sum of all the costs incurred to bring the asset to its intended use. Answer: True LO: 7-1 Diff: 2 EOC: S7-2 7.1-2 The cost of land may include the cost to remove an unwanted building. Answer: True LO: 7-1 Diff: 2 EOC:E7-15 7.1-3 Of the plant assets, buildings are depreciated because these are long-term tangible assets. Answer: True LO: 7-1 Diff: 2 EOC: E7-15 7.1-4 Land improvements are not subject to depreciation, as these items are subject to decay. Answer: False LO: 7-1 Diff: 2 EOC: E7-15 7.1-5 Costs of land improvements are included in the Land account. Answer: False LO: 7-1 Diff: 2 EOC: E7-17 7.1-6 Any cost to get machinery up and running should be part of the cost of the asset and depreciated. Answer: True LO: 7-1 Diff: 2 EOC: E7-17 7.1-7 The cost of leasehold improvements should be expensed immediately, as this is not a capital asset. Answer: False LO: 7-1 Diff: 2 EOC: E7-17 7.1-8 The cost of assets purchased together in a lump sum should be allocated using the cost paid for each of the assets. Answer: False LO: 7-1 Diff: 2 EOC: S7-3 7.1-9 An example of a long-term asset would be: A. office supplies. B. furniture. C. investment in LQH company. D. patents. Answer: B LO: 7-1 Diff: 2 EOC: P7-49A 7.1-10 All amounts paid to acquire a plant asset and to get it ready for its intended use are referred to as: set up costs. capital expenditures . C. maintenance expense. D. the cost of an asset. Answer: D LO: 7-1 Diff: 1 EOC: P7-48A 7.1-11 Which of the following should be included in the cost of land? A. Construction cost of a parking lot B. Landscaping C. Real estate brokerage commission D. Lighting Answer: C LO: 7-1 Diff: 2 EOC: S7-2 7.1-12 Which of the following is NOT an intangible asset? A. Copyright Goodwill C. Patent D. Mineral rights