Question

1,2,3,5,8,10,11

QUESTIONS What are the two ty cachay is land different from other plant assets? yo major types of long-term assets that require a periodic write-off? Present examples for each type of asset the term that denotes the periodic write-off to expense. is what amounts constitute the acquisition cost of plant assets? ny bought land with a vacant building for $400,.000. Foss will use the building in its opera- oss allocate the purchase price between the land and building? Why or why not? Would your 2 In what rent if Foss intends to raze the building and build a new one? Why or why not? answer be different if the recognition of depreciation expense necessary to match revenue and expense propertly? is the pattern of plant asset utilization (or benefit) that corresponds to each of the following deprecia- swnmethods:() straight-line, (b) units-of-production, (e) double-declining halance? 9

Answer 1

1-	Two types of long term assets	Plant and Equipment
		Building
		These two are examples of long term assets which are periodically write off. The term used for write off are Depreciation expense and amortization
2-	Land is different from other plant assets because other plant assets are subject to peridocially write off while land is not subject to periodically write off
3-	Acquisition cost include purchase price plus installation charges plus any kind of training of employees to operate the plant and equipment
4-	Yes there should allocation of purchase price into value of land and value of building because building would be subject to depreciation while value of land would not be depreciated. If building is razed then all the value of purchase price would be treated as cost of land only
5-	Depreciation is considered as an expense for the period and which was occurred due to the use of plant and equipment for the period so loss in the value of asset due to use should be charged with the income of the period
6-	example of revenue expenditure - wage expense and advertising expense - these reveneue expenditure should be charged against the revenue of the period
7-	Straight line method	equal depreciation would be charged during the whole life of the plant and plant would be depreciated equally through out the life of machine
	Units of production	Depreciation would be charged as the plant would be put in use so main advantage is that only that portion of wear and tear would de expensed which is used in actual
	double declining method	In this method initially higher rate of depreciation would be charged and less would be charged at later years so this will help in reducing the gain on sale of asset which will reduces tax liability at the time of sale