Homework Answers
Question 28 :
Correct answer is option E = Routine repair and maintenance costs
Long lived assets are long term assets that are expected to provide economic benefits over a long period of time.
examples of long lived assets are land, buildings, furniture and fittings and machinery.
Long lived assets may be tangible or intangible. Examples for intangibles are patents, copyrights, trademarks.
To determine the carrying cost of long lived assets, all the expenditure incurred to bring the asset put to use shall be included in the carrying cost.
However regular maintenance costs are not included in the cost of long lived assets as they are revenue expenses and charged to income statement.
option A : purchase price is the price paid to acquire the asset which should be included.
option B: Future obligations related to removing asset shall be included .
option C: Staff training necessary for the asset to make it ready to use and it is incurred only once and should be capitalized by including in cost of the long lived asset
option D: shipping charges are includible in cost of asset .
option E: Routine repair and maintenance costs are incurred every year and they should be treated as revenue expenses and charged to income statement. They are not includible in the cost of asset.
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1
Record the issuance of 520 bonds at face value of $1,000 each
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2
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3
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Record the interest and face value payment on December 31,
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1
Record the issuance of 520 bonds at face value of $1,000 each
for $506,090.
2
Record the interest payment on December 31, 2018.
3
Record the interest payment on December 31, 2019.
4
Record the interest and face value payment on December 31,
2020.
5
Record the retirement of the bonds at a quoted price of 98,
assuming the bonds are retired on January 1, 2020.
General journal entry options:
No Journal Entry Required
Accounts Payable
Accounts Receivable
Accumulated...
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