10.docx - Chapter 9 Plant Assets Natural Resources and...

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3/28/2018 Chapter 9. Plant Assets, Natural Resources, and Intangible Assets Plant Assets o Definition Physical substance Used in the operations Not intended for sale Expected to be of use for a number of years o Determining the cost of plant assets: (Historical Cost Principle) Land Cash purchase price Closing costs (title, attorney’s fees) Real estate brokers’ commissions Accrued property taxes and other liens on the land Land Improvements Structural additions to land Limited useful lives Expenses depreciates Building Purchase costs: purchase price, closing costs, real estate broker’s commission, remodeling & replacing the roof, floors, plumbing, etc. Construction costs: architects’ fee, building permits, excavation costs, interest expense on loads. Equipment: (acquiring the equipment & preparing it) Purchase price Sales taxes Freight charges Insurance Expenditures required in assembling, installing, testing, etc.
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