9.6 Property: Check for Understanding

In this activity, you will display your knowledge of capital assets and the capital asset threshold. Check the box with the Capital assets, as prompted by the question:

In this activity, you will display your knowledge of capital assets and the capital asset threshold. Check the box with the capital assets, as prompted by the question:
multiple
Answer: 
$40,000 cell sorting machine
correct
Correct. This piece of equipment exceeds the capital threshold of $5,000 and has a useful life of more than one year, so it qualifies as capital equipment.
Incorrect. This piece of equipment exceeds the capital threshold of $5,000 and has a useful life of more than one year, so it qualifies as capital equipment.
Answer: 
$10,000 diode that will be exploded during laser testing
incorrect
Correct. While the diode costs more than the current $5,000 threshold, it does not have a useful life of more than one year. This is a lab supply.
Incorrect. While the diode costs more than the current $5,000 threshold, it does not have a useful life of more than one year. This is a lab supply.
Answer: 
$10,000 completed fabrication
correct
Correct. At Stanford, we capitalize our fabricated equipment at the capital threshold, currently $5,000, so regardless of the fiscal year it is completed in, a $10,000 fabrication will be capitalized upon completion.
Incorrect. At Stanford, we capitalize our fabricated equipment at the capital threshold, currently $5,000, so regardless of the fiscal year it is completed in, a $10,000 fabrication will be capitalized upon completion.
Answer: 
The purchase of $10,000 worth of materials (screws, wire, sheet metal, etc.) to be used to create a fabrication. This material is currently in a stock room in the Physics department, and each piece is less than $5,000.
incorrect
Correct. While these materials together total more than the current $5,000 threshold, the individual pieces do not meet that amount and should be acquired as non-capital material. These items should be tracked at the department level until they are incorporated into the fabrication. Once the fabrication is complete, it should be capitalized.
Incorrect. While these materials together total more than the current $5,000 threshold, the individual pieces do not meet that amount and should be acquired as non-capital material. These items should be tracked at the department level until they are incorporated into the fabrication. Once the fabrication is complete, it should be capitalized.
Answer: 
A $3,000 computer
incorrect
Correct. The capital equipment threshold is $5,000, so a $3,000 computer would not be considered capital.
Incorrect. The capital equipment threshold is $5,000, so a $3,000 computer would not be considered capital.
Answer: 
purchase order with 8 chairs each costing $1,000 for a total of $8,000 (plus tax)
correct
Correct. At Stanford, we do not equate the total of the purchase order with capital equipment status. Since each line item was less than the capital threshold, the entire PO should be coded "non-capital".
Incorrect. At Stanford, we do not equate the total of the purchase order with capital equipment status. Since each line item was less than the capital threshold, the entire PO should be coded "non-capital".
Answer: 
A donated computer with a fair market value of $5,000
correct
Correct. This piece of equipment is priced at the capital threshold and has a useful life of more than one year, so it qualifies as capital equipment.
Incorrect. This piece of equipment is priced at the capital threshold and has a useful life of more than one year, so it qualifies as capital equipment.
 

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