Question

Which of the following would not be considered a long lived asset?

a. buildings
b. land improvements
c. inventory
d. land

Answer 1

Inventory is not considered a long-lived asset as it consists of goods ready for sale and reflects current business conditions, whereas buildings, land improvements, and land are long-lived assets.

Step-by-step explanation:

In terms of long-lived assets, which are assets that provide value over an extended period of time, inventory does not qualify. While buildings, land improvements, and land are indeed long-lived assets, accounting for a significant part of an economy's structure category, inventory is characterized by being more short-term. Inventories consist of goods that a business has produced but not yet sold, which are stored in warehouses and on store shelves, reflecting current business conditions and thus are not long-lived assets.

Answer 2

Inventory is not considered a long lived asset because it is usually sold within a single accounting period, unlike buildings, land improvements, and land which provide benefits over multiple periods (option c).

Step-by-step explanation:

Out of the options provided, inventory would not be considered a long lived asset. Long lived assets are assets that provide economic benefits over multiple accounting periods. Buildings, land improvements, and land are such assets with benefits extending over a longer term. Inventory, on the other hand, is typically a short-term asset that businesses aim to sell within a single accounting period. The turn around on inventory depends on business conditions, in good business conditions inventory may deplete faster, whereas in worse conditions it might accumulate.

Hence, the answer is option c.