Reference no: EM132960984

Problem 1. Which of these is not a major characteristic of a plant asset?

a. Possesses physical substance

b. Acquired for use in operations

c. Long-term in nature

d. All of these are major characteristics of a plant asset.

Problem 2. Which of the following is not a major characteristic of a plant asset?

a. Possesses physical substance

b. Acquired for resale

c. Acquired for use

d. Long-term in nature

Problem 3. Cotton Hotel Corporation recently purchased Emporia Hotel and the land on which it is located with the plan to tear down the Emporia Hotel and build a new luxury hotel on the site. If the new hotel was constructed, the cost of demolition of the old Emporia hotel should:

a. capitalized as part of the cost of the land.

b. capitalized as part of the cost of the new hotel.

c. written off as loss in the year the hotel is torn down.

d. depreciated over the period from acquisition to the date the hotel is scheduled to be torn down.

Problem 4. The cost of land does not include

a. costs of improvements with limited lives.

b. costs of grading, filling, draining, and clearing.

c. special assessments.

d. costs of removing old buildings.