TRUE-FALSE STATEMENTS
1. All plant assets (fixed assets) must be depreciated for accounting purposes.
2. When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account.
3. When purchasing delivery equipment, sales taxes and motor vehicle licenses should be charged to Delivery Equipment.
4. Once cost is established for a plant asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, fair value becomes the basis for accountability.
5. Land is reported on the statement of financial position at its cost less accumulated depletion, or at its fair value, whichever is higher.
6. Land improvements are reported on the statement of financial position at their cost less accumulated depreciation.
7. Accumulated depreciation is reported on the statement of financial position as a deduction from plant assets.
8. Recording depreciation on plant assets affects the statement of financial position and the income statement.
9. The depreciable cost of a plant asset is its original cost minus obsolescence.
10. Recording depreciation each period is an application of the expense recognition principle.