Ch10s - Chapter10 AcquisitionandDispositionofProperty,...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 10 Acquisition and Disposition of Property,  Plant, and Equipment
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 10: Key Concepts Acquisition Valuation Dispositions Post-Acquisition Costs 2 Accounting 301A-Eiler
Background image of page 2
Operational Assets not  held for resale. Long-Term Typically Depreciated. Exception? _Land_________. Tangible Assets with Physical Substance Physical assets that produce benefits. Examples? _____Buildings, machines___________. Intangible Assets that Lack Physical Substance Rights that produce benefits. Examples? Patents, franchise Accounting 301A-Eiler 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Determining Acquisition Cost. Costs included in the acquisition cost of the asset differ across  asset types. Sometimes additional amounts are “capitalized”. Special issues if the asset is self-constructed. Statements. Accounting for Dispositions. Accounting for Costs Subsequent to Acquisition. Repairs & Maintenance; Improvements Capitalize or Expense? Accounting 301A-Eiler 4
Background image of page 4
Determining Acquisition Cost Key Question is what amount should be capitalized (i.e.,  recorded as an asset) at time of acquisition? Accounting objective is to capitalize costs that produce  benefits in future periods  and expense any costs that do not  produce future benefits. What happened in the WorldCom case? Overstated net income Accounting 301A-Eiler 5
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Determining Acquisition Cost Land Purchase price. Closing costs, attorney fees, and recording fees. Costs of getting land ready for use (clearing, etc.). Includes the cost of buildings on the land and their removal, if  they are demolished and removed. Special assessments for local improvements. Assumption of liens or encumbrances. Additional improvements with an indefinite life. Note: Sale of salvaged materials reduces cost. Accounting 301A-Eiler 6
Background image of page 6
Land Improvements have a limited useful life and are  life (e.g., sidewalks, landscaping, parking lots, fencing).  Buildings Overhead.  Permits. Equipment Purchase Price. Accounting 301A-Eiler
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/08/2011 for the course ECON 102 taught by Professor Smith during the Spring '11 term at Saddleback.

Page1 / 28

Ch10s - Chapter10 AcquisitionandDispositionofProperty,...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online