Chapter 10 lecture notes.doc - Wahlen 2nd Edition Acctg 301 1of 6 ACCT 301 Chapter 10 Lecture Notes Property Plant and Equipment Acquisition and

Chapter 10 lecture notes.doc - Wahlen 2nd Edition Acctg 301...

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Acctg 301 Wahlen 2 nd Edition 1of 6 ACCT 301 Chapter 10 Lecture Notes Property, Plant, and Equipment: Acquisition and Disposal LO 10.1 Describe the characteristics of property, plant, and equipment LO 10.2 Identify the costs to be included in the acquisition of property, plant, and equipment LO 10.3 Determine the cost of property, plant, and equipment obtained by non monetary exchange of assets LO 10.4 Compute the cost of a self constructed asset, including capitalized interest LO 10.5 Describe the accounting for expenditures incurred subsequent to acquisition LO 10.6 Appendix 10.1 Explain the accounting for oil and gas companies LO 10.1 Describe the characteristics of property, plant, and equipment 10-3 through 10-4 A. Definition: 1. Tangible non-current assets that are used by a company in the normal operations of its business. B. Characteristics: 1. Use, not investment 2. Life greater than one year 3. Tangible C. Capitalize vs. Expense: 1. Capitalize: Expenditure is debited to an asset Cost goes to the income statement in form of depreciation 2. Expense: Expenditure is debited to an expense immediately Cost never appears on the balance sheet /var/filecabinet/temp/converter_assets/de/fd/defd1a29e4c1ae37bedcf39f45c12a26164a202c.doc
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Acctg 301 Wahlen 2 nd Edition 2of 6 LO 10.2 Identify the costs to be included in the acquisition of property, plant, and equipment 10-5 through 10-13 A. Acquisition by purchase: 1. Determination of cost of land: a. Purchase price b. Costs of closing and obtaining title 1) Commissions, options, legal fees, title search, past due taxes c. Costs of surveys d. Costs of preparing land for use 1) Removing an old building 2. Determination of cost of building: a. Contract price b. Costs of remodeling and reconditioning c. Costs of excavation for the specific building d. Architectural costs and costs of building permits
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