Acc641_PPE - Copy - Property, Plant and Equipment IAS 16 1...

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Property, Plant and Equipment IAS 16 1
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Learning Objectives Understand how to measure PP&E at its recognition Understand the reporting of PP&E under the revaluation model 2
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Property, Plant and Equipment and Its Recognition are held for use in the production or supply of goods or services, for rental to others, or for administrative purpose; and are expected to be used during more than one period Shall be recognized as an asset if, and only if it is probable that future economic benefits will flow to the entity; and the cost can be measured reliably. 3
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Clean Company wants to be viewed as the most environmentally friendly company in its industry. As a result, the company installs equipment on its smoke stacks to reduce emissions. The equipment costs $30,000 and has a three-year life. How would this equipment be accounted for using US GAAP and IFRS? 4
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Measurement at Initial Recognition Measured at Cost It is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset Elements of Cost Purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates Any other directly attributable costs (costs that would not have been incurred if the asset was not purchased or constructed) Costs of dismantling and removing the item and restoring the site 5
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Elements of costs: examples A company acquires a type of equipment that its employees have never operated before. During the installation period, the employees receive extensive training on the equipment. The cost to
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This note was uploaded on 11/02/2011 for the course ACCOUNTING ACC641 taught by Professor Lin during the Spring '11 term at Prince George's Community College, Largo.

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Acc641_PPE - Copy - Property, Plant and Equipment IAS 16 1...

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