3. Intermediate Accounting

Property Plant Equipment — Quiz

Test your understanding of property plant equipment with 5 practice questions.

Practice Questions

Question 1

A company acquires a machine for $$ \$200,000 $ . It incurs $ \$10,000 $ for shipping, $ \$15,000 $ for installation, and $ \$5,000 $$ for a one-time employee training session on how to operate the machine. What is the total capitalized cost of the machine?

Question 2

Under which of the following circumstances would a company be required to perform an impairment test for its property, plant, and equipment?

Question 3

A company uses the straight-line depreciation method. An asset was purchased for $$ \$150,000 $ with an estimated useful life of $ 10 $ years and a salvage value of $ \$10,000 $ . After $ 4 $ years, the company revises the remaining useful life to $ 5 $ years and the salvage value to $ \$5,000 $$ . What is the depreciation expense for the fifth year?

Question 4

When an asset is exchanged for another similar asset, and the exchange lacks commercial substance, how is the gain or loss recognized?

Question 5

Which of the following would be considered a betterment or improvement that should be capitalized?