Property Plant and Equipment MCQs

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Which of the following is not an appropriate basis for measuring the cost of property, plant, and equipment?






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An entity installed an assembly line in Year 1. Four years later, $100,000 was invested to automate the line. The automation increased the market valu...






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"A theme park purchased a new, exciting ride and financed it through the manufacturer. The following facts pertain:" Purchase p...






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Which of the following is not an appropriate basis for measuring the historical cost of property, plant, and equipment?






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In making a cash flow analysis of property, plant, and equipment (PPE), the internal auditor discovered that depreciation expense for the period was $...






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On January 1, Year 1, an entity purchased an abandoned quarry for $1,200,000 to be used as a landfill to service its trash collection contracts with n...






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A new machine has an initial cost of $300,000, an estimated useful life of 2,000 hours of use over a 3-year period, and an estimated residual value of...






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A company uses straight-line depre accelerated depreciation for tax purposes. Which of the following account balances would be lower in the financial ...






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All of the following would be included as part of the cost of a depreciable asset except the






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The board of directors of Ingold Industries, Inc., authorized Don Burger, president of Ingold, to pay as much as $90,000 to purchase a tract of land a...






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Basic Brick, Inc., purchased manufacturing equipment for $100,000, with an estimated useful life of 10 years and a salvage value of $15,000. The secon...






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Which one of the following characteristics is not required for an asset to be properly described as property, plant, and equipment?






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Equipment bought by Wilson Steam Generating Company 3 years ago was charged to equipment expense in error. The cost of the equipment was $100,000, wit...






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The types of assets that qualify for interest capitalization are






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Wellington Industries has owned its present facilities since 1981, and Mary Dunlap, CEO, has authorized various expenditures to repair and improve the...






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Lakeside Electric purchased a truck for $38,600 to transport equipment to various job sites. For this purpose, storage bins were welded to the truck b...






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Albright Company uses the sum-of-the-years’-digits (SYD) method of depreciation. On January 1, the company purchased a machine for $50,000. It had ...






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When a fixed plant asset with a 5-year estimated useful life is sold during the second year, how would the use of an accelerated depreciation method ...






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Which one of the following methods of depreciation will result in the lowest reported net income in the early life of a depreciable asset?






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Silken, Inc., a distributor of silk goods, is in its first year of operation. The company has purchased ten computers at $3,500 each with an estimate...






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In which of the following situations is the units-of-production method of depreciation most appropriate?






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Under IFRS, according to the revaluation model, an item of property, plant, and equipment must be carried at






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Merry Co. purchased a machine costing $125,000 for its manufacturing operations and paid shipping costs of $20,000. Merry spent an additional $10,000...






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According to IFRS, which accounting policy may an entity apply to measure investment property in periods subsequent to initial recognition?






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An expenditure to install an improved electrical system is a Capital Expenditure Revenue Expenditure






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"Brown Systems began operating January 1 and spent $900,000 in the first month of operations on the following items:" January...






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An entity sells a piece of machinery, for cash, prior to the end of its estimated useful life. The sale price is less than the carrying amount of the...






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An entity purchased a machine for $700,000. The machine was depreciated using the straight-line method and had a residual value of $40,000. The machi...






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What is the journal entry recorded upon the sale of an item of property, plant, and equipment (PPE) that was sold for cash in excess of its carrying ...






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An entity sold a depreciable asset in the middle of the fifth year of its estimated 10-year useful life. The original cost of the asset was $100,000, ...






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To determine whether to recognize the impairment of a depreciable fixed asset, a company must compare the






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Fact Pattern: "Blake Corporation has determined that one of its machines has experienced an impairment in value. However, the compan...






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Fact Pattern: "Blake Corporation has determined that one of its machines has experienced an impairment in value. However, the compan...






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An entity purchased a machine on January 1, Year 1, for $1,000,000. The machine had an estimated useful life of 9 years and a residual value of $100,0...






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Which of the following statements is true regarding impairment of long-lived assets?






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An entity applies IFRS. On December 31, Year 1, it estimates the following information regarding its headquarters building: Fa...






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Testing for possible impairment of a long-lived asset (asset group) that an entity expects to hold and use is required






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A company has a long-lived asset with a carrying value of $120,000, expected future cash flows of $130,000, present value of expected future cash flo...






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An impairment loss on a long-lived asset (asset group) to be held and used is reported by a business enterprise in






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Last year, Katt Co. reduced the carrying amount of its long-lived assets used in operations from $120,000 to $100,000, in connection with its annual ...






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Under IFRS, an asset is impaired when its carrying amount exceeds its recoverable amount. The recoverable amount of an asset is






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Under IFRS when accounting for plant, property, and equipment, a company






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Under the IFRS revaluation model for accounting for plant, property, and equipment






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Under IFRS, when an entity chooses the revaluation model as its accounting policy for measuring property, plant, and equipment, which of the followi...






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Fred Berk bought a plot of land with a cash payment of $40,000 and a purchase money mortgage of $50,000. In addition, Berk paid $200 for a title ins...






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Smith made a gift of property to Thompson. Smiths basis in the property was $1,200. The fair market value at the time of the gift was $1,400. Thomp...






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Julie received a parcel of land as a gift from her Aunt Agnes. At the time of the gift, the land had a fair market value of $83,000 and an adjusted ...






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In 2010 Iris King bought shares of stock as an investment, at a cost of $10,000. During 2012, when the fair market value was $8,000, Iris gave the s...






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In 2010 Iris King bought shares of stock as an investment, at a cost of $10,000. During 2012, when the fair market value was $8,000, Iris gave the s...






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Lauras father, Albert, gave Laura a gift of 500 shares of Liba Corporation common stock in 2012. Alberts basis for the Liba stock was $4,000. At t...






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Lauras father, Albert, gave Laura a gift of 500 shares of Liba Corporation common stock in 2012. Alberts basis for the Liba stock was $4,000. At t...






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Lauras father, Albert, gave Laura a gift of 500 shares of Liba Corporation common stock in 2012. Alberts basis for the Liba stock was $4,000. At t...






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On June 1, 2012, Ben Rork sold 500 shares of Kul Corp. stock. Rork had received this stock on May 1, 2012, as a bequest from the estate of his uncle...






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Fred Zorn died on June 5, 2012, bequeathing his entire $6,000,000 estate to his sister, Ida. The alternate valuation date was validly elected by the...






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On October 1, 2012, Lois Rice learned that she was bequeathed 1,000 shares of Elin Corp. common stock under the will of her uncle, Pat Prevor. Pat h...






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On October 1, 2012, Lois Rice learned that she was bequeathed 1,000 shares of Elin Corp. common stock under the will of her uncle, Pat Prevor. Pat h...






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In January 2013, Joan Hill bought one share of Orban Corp. stock for $300. On March 1, 2013, Orban distributed one share of preferred stock for each...






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In January 2013, Joan Hill bought one share of Orban Corp. stock for $300. On March 1, 2013, Orban distributed one share of preferred stock for each...






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On July 1, 2007, Lila Perl paid $90,000 for 450 shares of Janis Corp. common stock. Lila received a nontaxable stock dividend of 50 new common share...






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In a like-kind exchange of an investment asset for a similar asset that will also be held as an investment, no taxable gain or loss will be recogn...






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Pat Leif owned an apartment house that he bought in 2000. Depreciation was taken on a straight-line basis. In 2013, when Pats adjusted basis for th...






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On July 1, 2013, Riley exchanged investment real property, with an adjusted basis of $160,000 and subject to a mortgage of $70,000, and received fro...






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On October 1, 2012, Donald Anderson exchanged an apartment building having an adjusted basis of $375,000 and subject to a mortgage of $100,000 for $...






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An office building owned by Elmer Bass was condemned by the state on January 2, 2011. Bass received the condemnation award on March 1, 2012. In orde...






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In March 2012, Davis, who is single, purchased a new residence for $200,000. During that same month he sold his former residence for $380,000 and pa...






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The following information pertains to the sale of Al and Beth Orans principal residence: Date of sale February 2013 Date of purchase October 1996 ...






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Ryan, age fifty-seven, is single with no dependents. In January 2013, Ryans principal residence was sold for the net amount of $400,000 after all s...






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Miller, an individual calendar-year taxpayer, purchased 100 shares of Maples Inc. common stock for $10,000 on July 10, 2012, and an additional fifty...






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Smith, an individual calendar-year taxpayer, purchased 100 shares of Core Co. common stock for $15,000 on December 15, 2012, and an additional 100 s...






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On March 10, 2012, James Rogers sold 300 shares of Red Company common stock for $4,200. Rogers acquired the stock in 2009 at a cost of $5,000. On A...






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Murd Corporation, a domestic corporation, acquired a 90% interest in the Drum Company in 2009 for $30,000. During 2013, the stock of Drum was declar...






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If an individual incurs a loss on a nonbusiness deposit as the result of the insolvency of a bank, credit union, or other financial institution, the...






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Conner purchased 300 shares of Zinco stock for $30,000 in 2008. On May 23, 2012, Conner sold all the stock to his daughter Alice for $20,000, its th...






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Conner purchased 300 shares of Zinco stock for $30,000 in 2008. On May 23, 2012, Conner sold all the stock to his daughter Alice for $20,000, its th...






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In 2013, Fay sold 100 shares of Gym Co. stock to her son, Martin, for $11,000. Fay had paid $15,000 for the stock in 2009. Subsequently in 2013, Mar...






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Among which of the following related parties are losses from sales and exchanges not recognized for tax purposes?






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On May 1, 2012, Daniel Wright owned stock (held for investment) purchased two years earlier at a cost of $10,000 and having a fair market value of $...






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Al Eng owns 50% of the outstanding stock of Rego Corp. During 2013, Rego sold a trailer to Eng for $10,000, the trailers fair value. The trailer ha...






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For a cash basis taxpayer, gain or loss on a year-end sale of listed stock arises on the






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Lee qualified as head of a household for 2012 tax purposes. Lees 2012 taxable income was $100,000, exclusive of capital gains and losses. Lee had a...






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For the year ended December 31, 2012, Sol Corp. had an operating income of $20,000. In addition, Sol had capital gains and losses resulting in a net...






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In 2012, Nam Corp., which is not a dealer in securities, realized taxable income of $160,000 from its business operations. Also, in 2012, Nam sustai...






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For assets acquired in 2013, the holding period for determining long-term capital gains and losses is more than






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On July 1, 2012, Kim Wald sold an antique for $12,000 that she had bought for her personal use in 2010 at a cost of $15,000. In her 2012 return, Kim...






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Paul Beyer, who is unmarried, has taxable income of $30,000 exclusive of capital gains and losses and his personal exemption. In 2012, Paul incurred...






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Capital assets include






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Joe Hall owns a limousine for use in his personal service business of transporting passengers to airports. The limousines adjusted basis is $40,000...






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In 2013, Ruth Lee sold a painting for $25,000 that she had bought for her personal use in 2007 at a cost of $10,000. In her 2013 return, Lee should ...






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In 2012, a capital loss incurred by a married couple filing a joint return






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Platt owns land that is operated as a parking lot. A shed was erected on the lot for the related transactions with customers. With regard to capital...






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In 2009, Iris King bought a diamond necklace for her own use, at a cost of $10,000. In 2013, when the fair market value was $12,000, Iris gave this ...






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Which of the following is a capital asset?






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Don Mott was the sole proprietor of a high-volume drug store which he owned for fifteen years before he sold it to Dale Drug Stores, Inc. in 2012. B...






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An individuals losses on transactions entered into for personal purposes are deductible only if






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Which one of the following would not be Sec. 1231 property even though held for more than twelve months?






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Vermont Corporation distributed packaging equipment that it no longer needed to Michael Jason who owns 20% of Vermonts stock. The equipment, which ...






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Tally Corporation sold machinery that had been used in its business for a loss of $22,000 during 2013. The machinery had been purchased and placed i...






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On January 2, 2010, Bates Corp. purchased and placed into service seven-year MACRS tangible property costing $100,000. On July 31, 2012, Bates sold ...






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Thayer Corporation purchased an apartment building on January 1, 2009, for $200,000. The building was depreciated using the straight-line method. On...






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David Price owned machinery which he had acquired in 2011 at a cost of $100,000. During 2012, the machinery was destroyed by fire. At that time it h...