原创力文档C H A P T E R 10;Describe property, plant, and equipment.
Identify the costs to include in initial valuation of property, plant, 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 the disposal of property, plant, and equipment.;Acquisition;“Used in operations” and not for resale.
Long-term in nature and usually depreciated.
Possess physical substance.;Historical cost measures the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use.
Companies value property, plant, and equipment in subsequent periods using either the
cost method or
fair value (revaluation) method.;Includes all costs to acquire land and ready it for use. Costs typically include:;Improvements with limited lives, such as private driveways, walks, fences, and parking lots, are recorded as Land Improvements and depreciated.
Land acquired and held for speculation is classified as an investment.
Land held by a real estate concern for resale should be classified as inventory.;Includes all costs related directly to acquisition or construction. Cost typically include:;Include all costs incurred in acquiring the equipment and preparing it for use. Costs typically include:;Three approaches have been suggested to account for the interest incurred in financing the construction.;IFRS requires — capitalizing actual interest (with modification).
Consistent with historical cost.
Capitalization considers three items:
Qualifying assets.
Capitalization period.
Amount to capitalize.;Require a substantial period of time to get them ready for their intended use.
Two types of assets:
Assets under construction for a company’s own use.
Assets intended
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