8.2 Calculate and record the acquisition of plant assets
1) When determining the cost of a plant asset, both IFRS and Canadian ASPE require the use of the market value principle.
2) Neither land nor land improvements are depreciated.
3) Whether a building is purchased or constructed, the same items are used to compute the price of the building.
4) Costs of testing machinery or equipment before it is used would be included in the price of the machinery or the equipment.
5) The cost of furniture and fixtures, such as desks, chairs and other items, includes its basic cost plus all other costs to ready the asset for its intended use.
6) Which of the following would NOT be considered as part of the cost of the land?
A) Survey
B) Realtor commissions
C) Paving
D) Unpaid property taxes on the land
E) Legal fees
7) Which of the following would be considered part of land improvements?
A) Removal of unwanted building on the land
B) Title transfer fees
C) Paving of the parking lot
D) Surveying fees
E) Legal fees
8) Which of the following would NOT be a part of land improvements?
A) Paving of the parking lot
B) Installing fences around the property
C) Putting in sidewalks
D) Grading and leveling the land
E) Underground sprinkler system
9) Which of the following would be included in the cost of a constructed building?
A) Purchase price of the building
B) Payments for material, labour, and overhead
C) Survey and legal fees
D) Realtor commissions
E) Cost of tearing down old building
10) Which of the following would NOT be considered as part of the cost of a constructed building?
A) Building permit fees
B) Contractor charges
C) Survey and legal fees
D) Architectural fees
E) Labour costs for construction of building