Chapter 10 Acquisition and Disposition of Property, Plant, and Equipment(中级会计)概要1.pptVIP

Chapter 10: Acquisition and Disposition of Property, Plant, and Equipment Describe the major characteristics of property, plant, and equipment. Identify the costs included in the initial valuation of land, buildings, and 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. Describe the accounting treatment for costs subsequent to acquisition. Describe the accounting treatment for disposal of property, plant, and equipment. PPE include: land, building, structures and equipment machinery, furniture and tools They are used in operations and not held for resale They are long term and are subject to depreciation (except land) They are tangible PPE is initially valued at historical cost. Historical cost includes: the asset’s cash or cash equivalent price, and the cost of readying the asset for use Land costs include: purchase price closing costs, attorney fees, and recording fees costs of getting land ready for use (clearing, etc.) special assessments for local improvements assumption of liens or encumbrances, and additional improvements with an indefinite life Sale of salvaged materials reduces cost Improvements with limited lives are recorded as Land Improvements (and not as Land) Building cost includes: costs of materials and labor, and overhead professional fees and building permits Cost of equipment includes: purchase price freight and handling charges costs of special foundation, installation, and initial testing. These are assets constructed by the business for use in operations. The cost of self-constructed assets includes: cost of direct materials, cost of direct labor, variable manufacturing overhead, a pro rata portion of the fixed overhead, and interest costs incurred during construction (with modification). Three questions must be an