ch10student

ch10student - Chapter 10 Class Notes 1 Cost of Land...

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1 Chapter 10 Class Notes
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2 Includes all costs to acquire land and ready it for use. Costs typically include: Cost of Land (1) the purchase price; (2) closing costs, such as title to the land, attorney’s fees, and recording fees; (3) costs of grading, filling, draining, and clearing; (4) assumption of any liens, mortgages, or encumbrances on the property; and (5) Additional land improvements that have an indefinite life.
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3 Includes all costs related directly to acquisition or construction. Costs typically include: Cost of Buildings (1) materials, labor, and overhead costs incurred during construction and (2) professional fees and building permits. Include all costs incurred in acquiring the equipment and preparing it for use. Costs typically include: Cost of Equipment (1) purchase price, (2) freight and handling charges (3) insurance on the equipment while in transit, (4) cost of special foundations if required, (5) assembling and installation costs, and (6) costs of conducting trial runs.
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4
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Self-Constructed Assets Costs typically include: (1) Materials and direct labor (2) Overhead can be handled in two ways: 1. Assign no fixed overhead 2. Assign a portion of all overhead to the construction process. Companies use the second method extensively. GAAP requires — capitalizing actual interest (with modification). Consistent with historical cost — all costs incurred to bring the asset to the condition for its intended use. Capitalization considers three items:
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This note was uploaded on 09/06/2009 for the course BUS 311 taught by Professor Staff during the Spring '08 term at IUPUI.

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ch10student - Chapter 10 Class Notes 1 Cost of Land...

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