Commercial Substance

Question

Gains on an exchange of plant assets that has commercial substance are

A.  deducted from the cost of the new asset acquired

B.  deferred

C.  not possible

D.  recognized immediately

Question

Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as

A.  capital expenditures

B.  expense expenditures

C.  improvements

D.  revenue expenditures

Question

Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as

A.  capital expenditures

B.  expense expenditures

C.  ordinary repairs

D.  revenue expenditures

Question

When an interest-bearing note matures, the balance in the Notes Payable account is

A.  less than the total amount repaid by the borrower

B.  the difference between the maturity value of the note and the face value of the note

C.  equal to the total amount repaid by the owner

D.  greater than the total amount repaid by the owner

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