Which of the following is not a requirement for an asset to be categorized as a plant asset? a....

Question:

Which of the following is not a requirement for an asset to be categorized as a plant asset?

a. Have physical substance.

b. Have a useful life of at least three years.

d. Currently used in operations.

e. Not held for investment purposes

Plant Assets:

A plant asset is defined as a long-term asset that is used in producing revenues in a business's operations. Plant assets are also known as fixed assets and are recorded at cost and depreciated over their useful lives.

Answer and Explanation:


Let us consider the alternatives:

a. Have a physical substance. Yes, plant assets cannot be intangible assets
b. Have a useful life of at least three years. No, it must have a useful life of more than one year
d. Currently used in operations. Yes, it must be used to generate revenues
e. Not held for investment purposes Yes, plant assets must be productive assets, not investment assets

Learn more about this topic:

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Plant Assets: Definition & Accounting Issues

from Accounting 101: Financial Accounting

Chapter 9 / Lesson 2
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