单选题
The cost of plant and equipment includes all
expenditures reasonable and necessary in acquring the asset and placing it in a
position and condition for use in the operations of the business. Only
reasonable and necessary expenditures should be{{U}} {{U}} 1
{{/U}} {{/U}}For example, if the company' truck driver receives a traffic
ticket while hauling a new machine to the plant, the traffic{{U}} {{U}}
2 {{/U}} {{/U}}is not part of the cost of the new machine. If the
machine is dropped and{{U}} {{U}} 3 {{/U}} {{/U}}while being
uploaded, the cost of repairing the damage should be{{U}} {{U}} 4
{{/U}} {{/U}}as expense in the current period and should not be added{{U}}
{{U}} 5 {{/U}} {{/U}}the cost of the machine. Cost
is most easily determined{{U}} {{U}} 6 {{/U}} {{/U}}an asset is
purchased for cash. The cost of the as set is then{{U}} {{U}} 7
{{/U}} {{/U}}to the cash outlay necessary in acquiring the asset{{U}}
{{U}} 8 {{/U}} {{/U}}any expenditure for freight, insurance while in
transit, installation, trial runs, and any other{{U}} {{U}} 9
{{/U}} {{/U}}necessary to make the asset ready for use. If plant assets
are{{U}} {{U}} 10 {{/U}} {{/U}}on the installment plan or by
issuance of notes payable, the interest element or carrying charge should
be{{U}} {{U}} 11 {{/U}} {{/U}}as interest expense and not as
part of the cost of the plant assets. Why should all the
incidental charges{{U}} {{U}} 12 {{/U}} {{/U}}to the acquisition
of a machine{{U}} {{U}} 13 {{/U}} {{/U}}included in its cost?
Why{{U}} {{U}} 14 {{/U}} {{/U}}treat these incidental charges as
expenses of the period in which the machine is acquired? The
answer is to be found in the basic accounting{{U}} {{U}} 15
{{/U}} {{/U}}of matching costs and revenue. The benefits of{{U}} {{U}}
16 {{/U}} {{/U}}the machine will be received over a span of years, 10
years, for example. During those 10 years the{{U}} {{U}} 17
{{/U}} {{/U}}of the machine will contribute to revenue.{{U}} {{U}}
18 {{/U}} {{/U}}, the total costs of the machine should be recorded in
the accounts as a(n){{U}} {{U}} 19 {{/U}} {{/U}}and allocated
against the revenue of the 10 years. All costs incurred in acquiring the machine
are costs for services to be{{U}} {{U}} 20 {{/U}} {{/U}}from
using the machine.