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
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|
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from Accounting 101: Financial AccountingChapter 9 / Lesson 2