Kieso_Inter_13e_Ch10

Kieso_Inter_13e_Ch10 - Chapter 10-1 C H A P T E R C H A P T...

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Unformatted text preview: Chapter 10-1 C H A P T E R C H A P T E R 10 10 ACQUISITION AND DISPOSITION OF ACQUISITION AND DISPOSITION OF PROPERTY, PLANT, AND EQUIPMENT PROPERTY, PLANT, AND EQUIPMENT Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield Chapter 10-2 Used in operations and not for resale. Long-term in nature and usually depreciated. Possess physical substance. Property, plant, and equipment includes land, buildings, and equipment (machinery, furniture, tools). Major characteristics include: Property, Plant, and Equipment Property, Plant, and Equipment LO 1 Describe property, plant, and equipment. LO 1 Describe property, plant, and equipment. Chapter 10-3 Historical cost is reliable. Companies should not anticipate gains and losses but should recognize gains and losses only when the asset is sold. Valued at Historical Cost , reasons include: Acquisition of PP&E Acquisition of PP&E LO 2 Identify the costs to include in initial valuation of property, plant, LO 2 Identify the costs to include in initial valuation of property, plant, and equipment. and equipment. APB Opinion No. 6 states, property, plant, and equipment should not be written up to reflect appraisal, market, or current values which are above cost. Chapter 10-4 Includes all costs to acquire land and ready it for use. Costs typically include: Cost of Land Acquisition of PP&E Acquisition of PP&E LO 2 Identify the costs to include in initial valuation of property, plant, LO 2 Identify the costs to include in initial valuation of property, plant, and equipment. and equipment. (1) the purchase price; (2) closing costs, such as title to the land, attorneys 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. Chapter 10-5 Includes all costs related directly to acquisition or construction. Costs typically include: Cost of Buildings LO 2 Identify the costs to include in initial valuation of property, plant, LO 2 Identify the costs to include in initial valuation of property, plant, and equipment. and equipment. (1) materials, labor, and overhead costs incurred during construction and (2) professional fees and building permits. Acquisition of PP&E Acquisition of PP&E Chapter 10-6 Include all costs incurred in acquiring the equipment and preparing it for use. Costs typically include: Cost of Equipment LO 2 Identify the costs to include in initial valuation of property, plant, LO 2 Identify the costs to include in initial valuation of property, plant, and equipment. and 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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This note was uploaded on 03/08/2011 for the course ACCT 3220 taught by Professor Hollie,dana during the Summer '08 term at Colorado.

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Kieso_Inter_13e_Ch10 - Chapter 10-1 C H A P T E R C H A P T...

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