COLLEGE ACCOUNTING 16TH EDITION
EXAM SCRIPT 2026 COMPLETE QUESTIONS
AND CORRECT ANSWERS
◉ 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. Yields services over a number of years Answer: b
◉ Which of these is not a major characteristic of a plant asset?
a. Possesses physical substance
b. Acquired for use in operations
c. Yields services over a number of years
d. All of these are major characteristics of a plant asset. Answer: d
◉ 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. The cost of the Emporia Hotel
should be
a. depreciated over the period from acquisition to the date the hotel is
scheduled to be torn down.
b. written off as an extraordinary loss in the year the hotel is torn down.
c. capitalized as part of the cost of the land.
, d. capitalized as part of the cost of the new hotel. Answer: c
◉ The cost of land does not include
a. costs of grading, filling, draining, and clearing.
b. costs of removing old buildings.
c. costs of improvements with limited lives.
d. special assessments. Answer: c
◉ The cost of land typically includes the purchase price and all of the
following costs except
a. grading, filling, draining, and clearing costs.
b. street lights, sewers, and drainage systems cost.
c. private driveways and parking lots.
d. assumption of any liens or mortgages on the property. Answer: c
◉ If a corporation purchases a lot and building and subsequently tears
down the building and uses the property as a parking lot, the proper
accounting treatment of the cost of the building would depend on
a. the significance of the cost allocated to the building in relation to the
combined cost of the lot and building.
b. the length of time for which the building was held prior to its
demolition.
c. the contemplated future use of the parking lot.
d. the intention of management for the property when the building was
acquired. Answer: d
EXAM SCRIPT 2026 COMPLETE QUESTIONS
AND CORRECT ANSWERS
◉ 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. Yields services over a number of years Answer: b
◉ Which of these is not a major characteristic of a plant asset?
a. Possesses physical substance
b. Acquired for use in operations
c. Yields services over a number of years
d. All of these are major characteristics of a plant asset. Answer: d
◉ 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. The cost of the Emporia Hotel
should be
a. depreciated over the period from acquisition to the date the hotel is
scheduled to be torn down.
b. written off as an extraordinary loss in the year the hotel is torn down.
c. capitalized as part of the cost of the land.
, d. capitalized as part of the cost of the new hotel. Answer: c
◉ The cost of land does not include
a. costs of grading, filling, draining, and clearing.
b. costs of removing old buildings.
c. costs of improvements with limited lives.
d. special assessments. Answer: c
◉ The cost of land typically includes the purchase price and all of the
following costs except
a. grading, filling, draining, and clearing costs.
b. street lights, sewers, and drainage systems cost.
c. private driveways and parking lots.
d. assumption of any liens or mortgages on the property. Answer: c
◉ If a corporation purchases a lot and building and subsequently tears
down the building and uses the property as a parking lot, the proper
accounting treatment of the cost of the building would depend on
a. the significance of the cost allocated to the building in relation to the
combined cost of the lot and building.
b. the length of time for which the building was held prior to its
demolition.
c. the contemplated future use of the parking lot.
d. the intention of management for the property when the building was
acquired. Answer: d
