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Applying the Cost Principle to Compute Plant Assets

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question 1 of 3

On what basis is a plant asset recorded in the financial records?

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1. The annual process of allocating the cost of a plant asset as it is used is known as _____.

2. The total purchase price of a basket or lump-sum purchase is allocated to each individual asset on the basis of _____.

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About This Quiz & Worksheet

This learning tool will help you review how the cost principle works in relationship to plant assets and how this process is resolved. Our multiple-choice quiz questions will measure your understanding of the cost principle and how to apply it to practice problems.

Quiz & Worksheet Goals

This quiz will test your understanding of the following:

  • How plant assets are recorded in financial records
  • What the process of allocating plant asset costs is called
  • How the price of a lump-sum purchase is allocated to an individual asset
  • How to calculate the total cost of a plant asset
  • Identify a revenue expenditure

Skills Practiced

  • Making connections - use understanding of the concept of the cost principle and how it applies to plant assets
  • Problem solving - use acquired knowledge to solve cost principle and asset practice problems
  • Interpreting information - verify that you can read information regarding the cost principle and interpret it correctly
  • Information recall - access the knowledge you've gained regarding plant assets and the cost principle

Additional Learning

If you'd like to learn more about the cost principle and how it's used with plant assets, review the lesson called Applying the Cost Principle to Compute Plant Assets. Once you've taken a look at this material, you should understand the following:

  • The definition of capitalizing
  • What net realizable value is
  • The difference between capital expenditures and revenue expenditures
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