PP&E_slides - Property, plant and equipment Typical...

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Property, plant and equipment
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Property, plant and equipment Page 2 Typical coverage of US GAAP Definition General Self-constructed assets Interest costs during construction Initial cost of natural resources Valuation at acquisition: Exchange of non-monetary assets Lump-sum purchases Deferred payment contracts Purchase paid for using company stock Costs incurred subsequent to acquisition Periodic valuation: Carrying value Impairment
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Property, plant and equipment Page 3 Typical coverage of US GAAP Cost allocation issues: Depreciation Definition Useful life Depreciable base Depreciation method Depletion Disposition: Sale Involuntary conversion Fully depreciated fixed assets Disclosure requirements
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Property, plant and equipment Page 4 Executive summary IFRS permits periodic revaluation of an entire class of fixed assets to fair value. US GAAP does not allow revaluation. IFRS has a one-step approach for determining impairment of fixed assets while US GAAP has a two-step approach. IFRS allows reversal of impairment losses on fixed assets, while this is prohibited using US GAAP. IFRS requires depreciation of components of an asset when the components have different periods of benefit. Component depreciation is permissible using US GAAP but is not a common practice.
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Property, plant and equipment Page 5 Primary pronouncements US GAAP ASC 360, Property, Plant and Equipment ASC 410-20, Asset Retirement and Environmental Obligations-Asset Retirement Obligations ASC 835-20, Interest-Capitalization of Interest IFRS IAS 16, Property, Plant and Equipment IAS 36, Impairment of Asset
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Property, plant and equipment Page 6 Progress on convergence Impairment was one of the short-term convergence projects agreed to by the FASB and IASB in their 2006 Memorandum of Understanding. In their September 2008 meeting, the FASB and IASB decided to defer work on convergence on impairment until other work is completed. Convergence on other fixed-asset-related accounting matters is not planned at this time.
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Property, plant and equipment Page 7 Definition PP&E includes long-term tangible assets acquired for use in operations and not for resale. Similar IFRS US GAAP
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Page 8 Acquisition General PP&E should be recorded based on the fair value given up or the value received, whichever is more clearly evident. Costs include purchase price and related taxes, directly attributable costs and estimated retirement obligation costs. Similar Similar Costs that are not directly attributable should be expensed as a period cost. Similar
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This note was uploaded on 09/30/2010 for the course ACCT 3311 taught by Professor Gregsommers during the Spring '10 term at Southern Methodist.

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PP&E_slides - Property, plant and equipment Typical...

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