10 Questions
Which of the following terms is commonly used as a synonym for property, plant, and equipment?
Plant assets
What does historical cost measure when acquiring property, plant, and equipment?
The cash or cash equivalent price of obtaining the asset and bringing it to the location and condition
What type of assets are property, plant, and equipment?
Assets of a durable nature used in operations
What is a key characteristic of property, plant, and equipment?
Possess physical substance
When do companies recognize property, plant, and equipment as assets?
When the cost of the asset can be measured reliably and it is probable that the company will obtain future economic benefits
What are property, plant, and equipment and what are some other commonly used terms for them?
Property, plant, and equipment are assets of a durable nature. Other terms commonly used are plant assets and fixed assets.
What are some examples of property, plant, and equipment?
Examples include land, building structures (offices, factories, warehouses), and equipment (machinery, furniture, tools).
When do companies recognize property, plant, and equipment as assets?
Companies recognize property, plant, and equipment when the cost of the asset can be measured reliably and it is probable that the company will obtain future economic benefits.
What does historical cost measure when acquiring property, plant, and equipment?
Historical cost measures the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition.
What are the key characteristics of property, plant, and equipment?
Property, plant, and equipment are assets of a durable nature, possess physical substance, and are used in operations rather than for resale.
Test your knowledge of property, plant, and equipment with this quiz prepared by Coby Harmon from the University of California, Santa Barbara and Westmont College. Learn to identify and understand the related costs of these durable assets essential for business operations.
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