Question

1. T/F - When constructing a building, a company is permitted to include the acquisition cost and certain interest costs incurred in financing the project.

2. T/F - Research and development costs can be classified as a property, plant, and equipment item or as an intangible asset.

3. T/F - Salvage value is not subtracted from plant asset cost in determining depreciation expense under the declining-balance method of depreciation.

4. T/F - The book value of a plant asset is the amount originally paid for the asset less anticipated salvage value.

5. T/F - The depreciable cost of a plant asset is its original cost minus obsolescence.

Answer 1

Part 1

True

All costs that are incurred to acquire and put the asset in use are capitalised

Part 2

False

Generally Computer software can be classified as a property, plant, and equipment item or as an intangible asset.

Part 3

True.

While calculating depreciation according to double declining method, simply acquisition cost is considered

Part 4

False

Book value is the acquisition cost less accumulated depreciation

Part 5

False

Depreciable cost = cost of asset - salvage value