Select all that applyFrom a financial reporting perspective, property, plant, and equipment and intangible assets exhibit the following characteristics (Select all that apply.)Multiple select question.short-livedrevenue-producinglong-livedvalued at fair value
Question
Select all that applyFrom a financial reporting perspective, property, plant, and equipment and intangible assets exhibit the following characteristics (Select all that apply.)Multiple select question.short-livedrevenue-producinglong-livedvalued at fair value
Solution
The correct answers are:
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Revenue-producing: Both property, plant, and equipment and intangible assets are used in the operations of a business and can generate revenue. For example, a company can use its machinery (a type of property, plant, and equipment) to produce goods for sale, and a patent (an intangible asset) can be used to produce and sell a unique product.
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Long-lived: These types of assets are expected to provide economic benefits over a long period of time. They are not intended for sale in the normal course of business, but are used to produce goods or services, for rental to others, or for administrative purposes.
The other options are not generally correct:
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Short-lived: This is typically not true for property, plant, and equipment and intangible assets, as these are usually long-term assets that provide benefits over several years.
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Valued at fair value: In financial reporting, property, plant, and equipment and intangible assets are usually recorded at cost, not fair value. They are then depreciated (for property, plant, and equipment) or amortized (for intangible assets) over their useful lives.
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