Which Of The Following Items Are Plant Assets? (Check All That Apply.)

Which Of The Following Items Are Plant Assets? (Check All That Apply.) A. Equipment with a useful life of less than one accounting period. B. Equipment used in operations. C. Land held for expansion. D. Building used for operations. E. Land on which the company warehouse sits. F. Land held for investments. G. Company parking lot used by company visitors. H. Building which houses the company’s headquarters. I. Patent. J. Land. K. Machinery and equipment. L. Land improvements. M. Buildings. N. Merchandise inventory. O. Office supplies. P. Cash.
The option A is not related with Plant Assets (PA) as the useful life of office equipment is less than one year while plant assets are used in the business operations for more than one year.

The option B shows office equipment used in the business which is classified under PA.

The option C is also correct as Land held for expansion purpose is considered under PA, as it will be utilized for business operations i.e., in the extended area of land, it is used for business operations for long-term benefits or for more than one year, so land is a PA.

The option D is also correct choice here as Building used during the business operations to generate revenue is classified as PA.

The option E is also correct one as anything, such as warehouse, situated on land is treated as PA as it becomes the part of it.

The option F is incorrect choice as land held for investment purposes is not used in the business operations but to get a return of investments on it i.e., land is used for rental income or to sell to another company when the value of land increases in the market. So, in this case, it is considered as investments and not PA.

The option G is also correct as a company parking lots are owned and controlled by the management of the company.

The option H is correct as building is used as a headquarters of the company to operate business activities.

The option I is not correct as a Patent is an intangible asset which has no physical existence whereas, plant assets have.

The option J is correct as it is a plant asset.

The option K is correct as plant & machinery are categorized under PA which are utilized in day-to-day operations.

Option L is also correct as any improvements made to land such as building, parking lots, drainage system, grading, etc. are considered as PA in accounting.

Option M is also a correct choice.

The option N shows a Current Asset i.e., Merchandise Inventory which is not a PA as it provides short-term benefits to the business i.e., less than or equal to one year

The options O and P are wrong choices here as both office supplies and cash are current assets and not PA.

Final Thoughts:

So, we can say that options B, C, D, E, G, H, J, K, L and M are correct options of this multiple choice question.

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