Question

Zimmerman Auto sells new and used cars. Its assets are as follows: (1) the showroom building, a separate building used to service customer cars, and various parking lots, (2) a nearby acre of land not currently used by the auto dealership, (3) new and used cars and trucks for sale to customers, and (4) a car that is used to provide rides to customers who prefer to wait at home while their cars are serviced. The assets that are classified as plant assets on the company's balance sheet include:
A. (1) and (2)
B. (1) and (4)
C. (1). (2), and (3)
D. (1). (3), and (4)

Answer 1

Answer:

B. (1) and (4)

Explanation:

Plant assets are tangible assets that have a useful life of more than 1 year, and are used by the company in its normal operations.

The cars available for sale are part of the inventory while the land is considered an investment. The only plant assets are the showroom and surrounding buildings, and the car that provides free rides to customers.