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Which of the following expenses is not included in the acquisition cost of a plant and equipment?
- a)Cost of site preparation
- b)Delivery and handling charges
- c)Installation costs
- d)Fire Insurance premium
Correct answer is option 'D'. Can you explain this answer?
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Which of the following expenses is not included in the acquisition cos...
Explanation:
Acquisition cost refers to the total cost incurred in the process of acquiring a plant and equipment. It includes various expenses incurred from the time of purchase until the asset is ready for use. However, the fire insurance premium is not included in the acquisition cost of a plant and equipment.
The following expenses are included in the acquisition cost of a plant and equipment:
1. Cost of site preparation: This includes the cost of clearing, grading, and leveling the site where the asset will be installed.
2. Delivery and handling charges: This includes the cost of transporting the asset from the seller's location to the buyer's location.
3. Installation costs: This includes the cost of assembling and installing the asset, including the cost of labor and materials.
4. Other costs: This includes any other cost incurred in the process of acquiring the asset, such as legal fees, appraisal fees, and taxes.
However, the fire insurance premium is not included in the acquisition cost of a plant and equipment because it is an ongoing expense that is incurred after the asset has been acquired. Fire insurance is a type of property insurance that covers the cost of damage caused by fire or other perils. It is typically paid on an annual basis and is not considered part of the acquisition cost of the asset.
Acquisition cost refers to the total cost incurred in the process of acquiring a plant and equipment. It includes various expenses incurred from the time of purchase until the asset is ready for use. However, the fire insurance premium is not included in the acquisition cost of a plant and equipment.
The following expenses are included in the acquisition cost of a plant and equipment:
1. Cost of site preparation: This includes the cost of clearing, grading, and leveling the site where the asset will be installed.
2. Delivery and handling charges: This includes the cost of transporting the asset from the seller's location to the buyer's location.
3. Installation costs: This includes the cost of assembling and installing the asset, including the cost of labor and materials.
4. Other costs: This includes any other cost incurred in the process of acquiring the asset, such as legal fees, appraisal fees, and taxes.
However, the fire insurance premium is not included in the acquisition cost of a plant and equipment because it is an ongoing expense that is incurred after the asset has been acquired. Fire insurance is a type of property insurance that covers the cost of damage caused by fire or other perils. It is typically paid on an annual basis and is not considered part of the acquisition cost of the asset.
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Which of the following expenses is not included in the acquisition cos...
Fire insurance premium is to secure your loss caused by fire. insureence premium is a expense it has his seprate account but It will never include in plant and equipment account. and plant and equipment is assets.
they both are totally different things
they both are totally different things
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Which of the following expenses is not included in the acquisition cost of a plant and equipment?a)Cost of site preparationb)Delivery and handling chargesc)Installation costsd)Fire Insurance premiumCorrect answer is option 'D'. Can you explain this answer?
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