Ollie Leased a Building in Old Town

question 5

Multiple Choice

Ollie leased a building in Old Town.Ollie installed a washer and dryer unit and a new furnace in the basement of the building with new duct work throughout the building.Upon expiration of the lease,Ollie intends to remove the washer and dryer,but not the furnace.The washer and dryer can easily be removed without harming anything.Removal of the furnace,however,will damage the building.Are the washer,dryer,and furnace fixtures?

• A)The washer,dryer,and furnace are all fixtures.
• B)The furnace is a fixture,but the washer and dryer are not.
• C)The washer and dryer are fixtures,but the furnace is not.
• D)The furnace and the washer are fixtures,but the dryer is not.

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Definitions:

Merchandise Inventory

Goods that a company holds with the intent to sell them as part of its business operations; considered a current asset on the balance sheet.

Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company’s financial position at a specific date, showing assets, liabilities, and shareholders’ equity.

Current Asset

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business.

Periodic Inventory System

An accounting method where inventory values and cost of goods sold are determined at the end of an accounting period.