ACCT 306 Final Exam (Answered)
142Q&A. 2025/2026. 100% Verified.
Which of the following is not a major characteristic of a plant asset?
acquired for resale
Which of these is not part of the historical cost of an asset?
training costs
The cost of land purchased as a building site does not include
costs of improvement with limited lives
Fences and parking lots are reported on the balance sheet as
land improvements
Which of the following costs are capitalized for self-constructed assets?
materials, labor, and overhead directly related to construction only
Which of the following would not be considered a remediation cost?
permit costs to acquire landfill site
Example of existing legal obligations that require recognition of an Asset Retirement Obligation
(ARO) include the following except:
acquisition costs of an oil or gas property
When computing the amount of interest cost to be capitalized, the concept of "avoidable interest"
refers to
that portion of total interest cost that would not have been incurred if expenditures for the asset
construction had not been made
The period of time during which interest must be capitalized ends when
the asset is substantially complete and ready for its intended use
When boot is involved in an exchange having commercial substance,
gains or losses are recognized in their entirety
Plant assets purchased on long-term credit contracts should be accounted for at
the present value of the future payments
When a plant asset is acquired by the issuance of common stock and the fair value of the plant asset
is not clearly determinable, the cost of the plant asset is properly measured by the
market price of the stock
In which of the following situations would a cost incurred after an asset's acquisition be capitalized?
, The useful life of the asset is increased.
Termination of an asset's service due to theft or fire is referred to as
involuntary conversion
Which of the following is true of depreciation accounting?
It is not a matter of valuation, It is part of matching revenues and expenses, and It is the process of
cost allocation
Which of the following principles best describes the conceptual rationale for the methods of
matching depreciation expense with revenues?
systematic and rational allocation
Each of the following is a physical factor affecting depreciation except
obsolescence
The term "depreciable base", or "depreciation base", as it is used in accounting, refers to
the total amount to be charged (debited) to expense over an asset's useful life
Economic factors that shorten the service life of an asset include
obsolescence
The activity method of depreciation
is a variable charge approach
For the composite method, the composite
life is the total depreciable cost divided by the total annual depreciation.
Depreciation is normally computed on the basis of the nearest
full month and to the nearest dollar
A change in estimate should
be handled in current and future periods
The book value of a plant asset is
the asset's acquisition cost less the total related depreciation recorded to date.
Depletion expense
is usually reported as cost of goods sold when the resource is sold.
Usually, companies compute depletion for accounting purposes using a
the units-of-production method
In accounting for oil and gas reserves, larger international companies tend to use
the successful-efforts concept
A general description of the depreciation methods applicable to major classes of depreciable assets
142Q&A. 2025/2026. 100% Verified.
Which of the following is not a major characteristic of a plant asset?
acquired for resale
Which of these is not part of the historical cost of an asset?
training costs
The cost of land purchased as a building site does not include
costs of improvement with limited lives
Fences and parking lots are reported on the balance sheet as
land improvements
Which of the following costs are capitalized for self-constructed assets?
materials, labor, and overhead directly related to construction only
Which of the following would not be considered a remediation cost?
permit costs to acquire landfill site
Example of existing legal obligations that require recognition of an Asset Retirement Obligation
(ARO) include the following except:
acquisition costs of an oil or gas property
When computing the amount of interest cost to be capitalized, the concept of "avoidable interest"
refers to
that portion of total interest cost that would not have been incurred if expenditures for the asset
construction had not been made
The period of time during which interest must be capitalized ends when
the asset is substantially complete and ready for its intended use
When boot is involved in an exchange having commercial substance,
gains or losses are recognized in their entirety
Plant assets purchased on long-term credit contracts should be accounted for at
the present value of the future payments
When a plant asset is acquired by the issuance of common stock and the fair value of the plant asset
is not clearly determinable, the cost of the plant asset is properly measured by the
market price of the stock
In which of the following situations would a cost incurred after an asset's acquisition be capitalized?
, The useful life of the asset is increased.
Termination of an asset's service due to theft or fire is referred to as
involuntary conversion
Which of the following is true of depreciation accounting?
It is not a matter of valuation, It is part of matching revenues and expenses, and It is the process of
cost allocation
Which of the following principles best describes the conceptual rationale for the methods of
matching depreciation expense with revenues?
systematic and rational allocation
Each of the following is a physical factor affecting depreciation except
obsolescence
The term "depreciable base", or "depreciation base", as it is used in accounting, refers to
the total amount to be charged (debited) to expense over an asset's useful life
Economic factors that shorten the service life of an asset include
obsolescence
The activity method of depreciation
is a variable charge approach
For the composite method, the composite
life is the total depreciable cost divided by the total annual depreciation.
Depreciation is normally computed on the basis of the nearest
full month and to the nearest dollar
A change in estimate should
be handled in current and future periods
The book value of a plant asset is
the asset's acquisition cost less the total related depreciation recorded to date.
Depletion expense
is usually reported as cost of goods sold when the resource is sold.
Usually, companies compute depletion for accounting purposes using a
the units-of-production method
In accounting for oil and gas reserves, larger international companies tend to use
the successful-efforts concept
A general description of the depreciation methods applicable to major classes of depreciable assets
