True / False Questions
1. Plant assets are assets held for sale.
2. Plant assets refer to intangible assets that are used in the operations of a business.
3. Plant assets are used in operations and have useful lives that extend over more than one accounting period.
4. Land held for future expansion is an intangible asset.
5. Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.
6. Salvage value is an estimate of an asset’s value at the end of its benefit period.
7. Inadequacy refers to the insufficient capacity of a company’s plant assets to meet the company’s growing productive demands.
8. Depreciation should be recorded on the date an asset is purchased.
9. Depreciation measures the actual decline in market value of an asset.
10. A plant asset’s useful life might not be the same as its productive life.
11. It is not necessary to report both the cost and the accumulated depreciation of plant assets in the financial statements.
12. Depreciation expense is calculated using estimates of an asset’s salvage value and useful life.
13. Accumulated depreciation represents funds set aside to buy new assets when the assets currently owned are replaced.
14. When an asset is purchased (or disposed of) at a time other than the beginning or the end of an accounting period, depreciation is recorded for part of a year so that the year of purchase or the year of disposal is charged with its share of the asset’s depreciation.
15. Revising an estimate of the useful life or salvage value of a plant asset is referred to as a change in accounting estimate, and is reflected in the past, current, and future financial statements.
16. The going concern assumption supports the reporting of plant assets at book value rather than market value. e