Schließen
Describe property, plant, and equipment
Identify the costs to include in initial of property, plant, and equipment: Cost of land
Identify the costs to include in initial of property, plant, and equipment: Cost of Buildings
Identify the costs to include in initial of property, plant, and equipment: Cost of equipment
Describe the accounting problems associated with self-constructed assets
Describe the accounting problems associated with interest capitalization
Understand accounting issues related to acquiring and valuing plant assets: Cash Discounts
Describe the accounting treatment for the disposal of property, plant, and equipment
Understand accounting issues related to acquiring and valuing plant assets: Deferred-payment contracts
Understand accounting issues related to acquiring and valuing plant assets: Lump-sum purchase
Understand accounting issues related to acquiring and valuing plant assets: Issuance of stock
Understand accounting issues related to acquiring and valuing plant assets: Exchanges of nonmonetary assets
Understand accounting issues related to acquiring and valuing plant assets: Contributions
Major characteristics of PPE : They are acquired for use in operations and not for resale
Major Characteristics of PPE: They are long-term in nature and usually depreciated
Major Characteristics of PPE: They possess physical substance
Historical cost: def
historical cost: Ex
Should not write up PPE to reflect fair value when it is above cost, because
Cost of land
Removal of Old Buildings
reductions in the price of land
back taxes and linens (cost of land)
special assessments
land held for resale
Costs of building
Cost of Equipment
Self-constructed asset
Self-constructed direct/indirect
Indirect costs:
Assign no fixed overhead to the cost of the constructed asset
Indirect costs:
Assign a portion of all overhead to the construction process
a pro rata portion
allocated overhead results in excess construction costs
Interest costs during construction:
Capitalize no interest charges during construction
Interest costs during construction:
Charge construction with all costs of funds employed, whether identifiable or not
Interest costs during construction:
Capitalize only the actual interest costs incurred during construction
GAAP- capitalize only the actual interest costs incurred during construction
Qualifying assets
not qualify for interest capitalization
capitalization period
avoidable interest
amount to capitalize
potential amount of interest that it may capitalize
Weighted-average accumulated expenditures
Interest Rate principles
Weighted average interest rate
Expenditures for land for particular use
Expenditures for land for a structure
expenditures for land for lot sale
Interest revenue
Valuation of PPE
long-term credit
Lump-sum price
Issuance of stock
exchange of nonmonetary assets
commercial substance
Type: Commercial Substance
Type: Lacks Commercial substance--no cash received
Type: Lacks Commercial substance---cash received
exchange lacks commercial substance
Exchanges: Loss Situation
Loss Situation JE
loss on disposal of machine
Exchanges: Gain Situation with Commercial substance
Gain Situation with commercial substance JE
Gain on disposal of truck
Exchanges: Gain Situation lacks commercial substance no cash
Gain Situation lacks commercial substance no cash JE
Gain Situation computations
Exchanges: Gain Situation lacks commercial substance some cash
Gain Situation lacks commercial substance some cash JE
Recognized Gain equation
Total gain on exchange-calculation
rationale of partial gain
Contribution
nonreciprocal transfers
assets as donations
FASB position on contributions
Promise immediately? unconditional
Promise immediately? conditional
prudent cost
Costs subsequent to acquisition
costs subsequent to acquisition: conditions
additions
improvements and replacements
rearrangement and re-installation
repairs
difference between improvements and replacements
Substitution Approach
capitalize the new cost
charge to accumulated depreciation
if the expenditure increase the future service potential of the asset...
rearrangement and re-installation costs
ordinary repairs
major repair
Disposition of PPE
Sale of plant assets
