ADMS 3585 Chapter 10 Study Sheet.docx

ADMS 3585 Chapter 10 Study Sheet.docx - ADMS 3585 Chapter...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
ADMS 3585 Chapter 10 Study Sheet Property, Plant, and Equipment Also known as tangible capital assets, plant assets, and fixed assets Examples: land, building, equipment, and natural resource properties Major characteristics include: 1. Acquired and held for use in operations and not for resale 2. Long-term in nature and usually subject to depreciation 3. Possess physical substance (tangible) Cost Elements Capitalized cost of property, plant, and equipment includes all expenditures needed to: acquire the asset (purchase price, net of discounts and rebates) bring it to its location and to state where it is ready for use (including delivery, site preparation, installation, assembly, professional fees, etc) discharge obligations associated with asset’s eventual disposal (e.g. site restoration) IFRS and ASPE share the above approach, but sometimes differ in specific application Self-Constructed Assets These are assets constructed by the business for use in operations The cost of self-constructed assets includes: Direct materials, Direct labour, Directly attributable overhead (e.g. variable manufacturing overhead) Dismantling and Restoration Costs Companies are often responsible for costs associated with dismantling the asset, removing it, and restoring the site at the end of its useful life These costs are often referred to as asset retirement costs and meet the recognition criteria for capitalization as part of PP&E asset costs IFRS and ASPE share the above approach, but sometimes differ in specific application Cash Discounts When cash discounts are offered on the purchase of plant assets, the Net-of- Discount Method is the preferred method The asset cost is reduced by the discount amount even if discount is not taken Deferred Payment Contracts Assets, purchased through long-term credit, are recorded at the present value of the consideration exchanged When no interest rate is stated, the cash price of the purchased asset is used to determine imputed interest rate Interest expense is recognized over the term of the deferred payment contract
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Lump-Sum Purchases
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern