Sullivan Ranch Corporation purchased a new tractor as an investment in equipment. Under which section of the balance sheet should this tractor be reported?

• A. Intangible Assets
• B. Current Assets
• C. Property, Plant, and Equipment
• D. Investments in Securities

Answer: (C)

Verified step by step guidance

1. Understand the classification of assets on the balance sheet. Assets are typically divided into categories such as Current Assets, Property, Plant, and Equipment (PPE), Intangible Assets, and Investments.
2. Review the nature of the tractor. A tractor is a physical, tangible asset used in operations, which makes it part of the Property, Plant, and Equipment category.
3. Consider the purpose of the tractor. Since it is purchased as an investment in equipment and is not intended for resale or short-term use, it does not qualify as a Current Asset.
4. Eliminate other categories. The tractor is not an Intangible Asset because it is a physical item, and it is not an Investment in Securities because it is not a financial instrument.
5. Conclude that the tractor should be reported under the Property, Plant, and Equipment section of the balance sheet, as it is a long-term tangible asset used in operations.