Question

The only major characteristic of property, plant, and equipment shown below is:

Entry field with the correct answer

a. They lack physical substance.
b. They are long-term in nature.
c. they are acquired for resale.
d. They are always subject to depreciation.

Answer 1

The major characteristic of property, plant, and equipment is that they are long-term in nature, used in operations to generate income, and subject to depreciation. This category does not include items intended for resale like collectibles, which may appreciate in value over time.

Step-by-step explanation:

The major characteristic of property, plant, and equipment is that they are long-term in nature. These are tangible assets a company uses in its operations to generate income, and they are not intended for resale in the normal course of business. Examples of property, plant, and equipment include items like buildings, machinery, vehicles, furniture, and land. Unlike inventory, these assets provide value over a longer period and therefore are subject to depreciation, which is the allocation of their cost over their useful lives. However, certain items like land are not depreciable as they don't typically diminish in value over time. On the other hand, collectibles such as art, rare coins, or stamps may not necessarily be categorized as property, plant, and equipment, as they can be acquired for personal enjoyment or potential resale at a higher value and may appreciate rather than depreciate over time.