PROBLEM 10-11 - PROBLEM 10-11(a The major characteristics...

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PROBLEM 10-11 (a) The major characteristics of plant assets, such as land, buildings, and equipment, that differentiate them from other types of assets are presented below. 1. Plant assets are acquired for use in the regular operations of the enterprise and are not for resale. 2. Property, plant, and equipment possess physical substance or existence and are thus differentiated from intangible assets such as patents and goodwill. Unlike other assets that possess physical substance (i.e., raw material), property, plant, and equipment do not physically become part of the product held for resale. 3. These assets are durable and long-term in nature and are usually subject to depreciation. (b) Transaction 1. To properly reflect cost, assets purchased on deferred payment contracts should be accounted for at the present value of the consideration exchanged between the contracting parties at the date of the consideration. When no interest rate is stated, interest must be imputed at a rate that approximates the rate that would be
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This note was uploaded on 06/06/2010 for the course ACCOUNTING ac505 taught by Professor Khan during the Spring '10 term at DeVry Fremont.

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PROBLEM 10-11 - PROBLEM 10-11(a The major characteristics...

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