Indicate whether the given statement is true or false.
Answer to Problem 1TF
The given statement is false.
Explanation of Solution
Long-term assets: The assets which are used to generate revenue for the business operations for a number of accounting periods are referred to as long-term assets.
Description: All the long-term assets wear-out gradually, except land. Land is the long-term asset that has unlimited useful life, hence, it is not depreciated. Land is the long-term asset that cannot be consumed completely. Hence, the statement is false.
Thus, the given statement is false as long-term assets either wear out gradually or consumed completely.
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Chapter 18 Solutions
Bundle: College Accounting, Chapters 1-27, Loose-leaf Version, 22nd + Cengagenowv2™, 2 Terms Printed Access Card For Heintz/parry's College ... Set For College Accounting, 22nd + Cenga
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- True or False: Depreciation is the decline in the market value of tangible fixed assets.arrow_forwardDepreciation is the decline in value of an asset over time due to normal wear and tear and to obsolescence. True Falsearrow_forwardWhich of the following payback methods assumes that the asset acquired may not last its estimated life. A. Traditional payback B. Present value payback C. Bail-out payback D. Payback reciprocalarrow_forward
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- What are the Effects of Inflation on Projects with Depreciable Assets?arrow_forwardEvaluate the consequences of depreciation charged on the historical cost of the assets. I) depreciation is calculated on the original cost of fixed assets, the resulting figure under accumulated depreciation will be only the amount equivalent to the original costof the asset. II) If depreciation is calculated as per historical accounting, sufficient funds will not be available for assets' replacement when its life is over. III) the replacement cost of the asset will be more than the original cost of inflation so that replacement provisions made by the way of depreciation charge on the original cost will be insufficient. IV) the conventional system of accounts based on historical cost does not give a true and fair view of the business enterprise. a. Statements I, Il and IV b. Statements I, II II and IV C. Statements I, Il and II d. Statements II, IIl and IVarrow_forwardExplain the historical cost concept as it applies to long-term operational assets. Why is the book value of an asset likely to be different from the current market value of the asset?arrow_forward
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,