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d. property and equipment.
S30. Historical cost is the basis advocated for recording the
acquisition of property, plant, and equipment for all of the following
reasons except
a. at the date of acquisition, cost reflects fair market value.
b. property, plant, and equipment items are always acquired at their
original historical cost.
c. historical cost involves actual trans-actions and, as such, is the
most reliable basis.
d. gains and losses should not be anticipated but should be
recognized when the asset is sold.
S31. To be consistent with the historical cost principle, overhead
costs incurred by an enterprise constructing its own building should
be
a. allocated on the basis of lost production.
b. eliminated completely from the cost of the asset.
c. allocated on an opportunity cost basis.
d. allocated on a pro rata basis between the asset and normal
operations.
32. Which of the following costs are capitalized for self-
constructed assets?
a. Materials and labor only
b. Labor and overhead only