The following selected account balances appear on the December 31, 2010 balance
ID: 2434217 • Letter: T
Question
The following selected account balances appear on the December 31, 2010 balance sheet of Chen Co.
Land (location of the corporation's office building)
$150,000
Land (held for future use)
225,000
Corporate Office Building
900,000
Inventory
300,000
Equipment
675,000
Office Furniture
150,000
Accumulated Depreciation
450,000
What is the total amount of property, plant, and equipment that will be reported on the balance sheet?
$1,425,000
$1,950,000
$1,650,000
$2,400,000
Land (location of the corporation's office building)
$150,000
Land (held for future use)
225,000
Corporate Office Building
900,000
Inventory
300,000
Equipment
675,000
Office Furniture
150,000
Accumulated Depreciation
450,000
Explanation / Answer
Property, plant and equipment is the long term or noncurrent asset section of the balance sheet. Included in this classification are land, buildings, machinery, office equipment, vehicles, furniture and fixtures used in a business. Also included in property, plant and equipment is the accumulated depreciation for these assets (except for land, which is not depreciated). The assets reported as property, plant and equipment are described as long-lived, tangible assets. They are also described as fixed assets or as plant assets. Generally, the property, plant and equipment assets are reported at their cost followed by a deduction for the accumulated depreciation that applies to all of these assets. Land (location of the corporation's office building) $150,000 Land (held for future use) 225,000 Corporate Office Building 900,000 Equipment 675,000 Office Furniture 150,000 Less : Accumulated Depreciation 450,000 -------------------------------------------------------------------------- Plant Assets $1425,000 -------------------------------------------------------------------------- Inventory is a Current Asset Land (held for future use) is an investment & is not being used in Business. hence not included here.
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