Property Plant and Equipment Paper 11

1

Assets that are received are measured at fair value.






2

This item’s costs include filling, draining, and removal of old structures.






3

Valued at the fair value of the note or fair value of the asset received in exchange.






4

A measurement of efficiency in using depreciable assets.






5

Includes parking lots, fences, and driveways, lighting and sprinkler systems.






6

Property, plant, and equipment and intangible assets are:






7

The acquisition costs of property, plant, and equipment do not include:






8

When selling property, plant, and equipment for cash:






9

Which of the following does NOT pertain to accounting for asset retirement obligations?






10

Montana Mining Co. (MMC) paid $200 million for the right to explore and extract rare metals from land owned by the state of Montana. To obtain the rights, MMC agreed to restore the land to a suitable condition for other uses after its exploration and extraction activities. MMC incurred exploration and development costs of $60 million on the project. MMC has a credit-adjusted risk free interest rate is 7%. It estimates the possible cash flows for restoring the land, three years after its extraction activities begin, as follows:
Cash Outflow - Probability
10 mil - 60%
30 mil - 40%
The asset retirement obligation (rounded) that should be recognized by MMC at the beginning of the extraction activities is:






Result

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