CH 10 - Chapter 10 Acquisition and Disposition of Property,...

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Unformatted text preview: Chapter 10 Acquisition and Disposition of Property, Plant & Equipment Intermediate Accounting 13th Edition Kieso, Weygandt, and Warfield Copyright Protected Chapter 10-2 1. Describe property, plant, and equipment. 2. Identify the costs to include in initial valuation of property, plant, and equipment. 3. Describe the accounting problems associated with self-constructed assets. 4. Describe the accounting problems associated with interest capitalization . 5. Understand accounting issues related to acquiring and valuing plant assets. 6. Describe the accounting treatment for costs subsequent to acquisition . 7. Describe the accounting treatment for the disposal of property, plant, and equipment . Learning Objectives Chapter 10-3 Acquisition Acquisition costs: Land, buildings, equipment Self-constructed assets Interest costs Valuation Cost Subsequent to Acquisition Dispositions Cash discounts Deferred contracts Lump-sum purchases Stock issuance Nonmonetary exchanges Contributions Other valuation methods Sale Involuntary conversion Miscellaneous problems Additions Improvements and replacements Rearrangement and reinstallation Repairs Summary Acquisition and Disposition of Property, Plant, and Equipment Chapter 10-4 Used in operations and not for resale. Long-term in nature and depreciated over time period or usage (quantity). Possess physical substance. Historical costs (IFRS provides for Revaluation) Property, plant, and equipment includes land, buildings, and equipment (machinery, furniture, tools). Major characteristics include: Property, Plant, and Equipment LO 1 Describe property, plant, and equipment. Chapter 10-5 Review Textbook to Understand Cost to Be Capitalized and Recorded as Assets Acquisition of PP&E LO 2 Identify the costs to include in initial valuation of property, plant, and equipment. (1) Cost of land not depreciated (2) Cost of equipment (3) Cost of buildings (4) May result from cash expenditures, loans, accounts payable, materials, interest expense for related debt used for asset or internal costs for self constructed assets (payroll) Chapter 10-6 Self-Constructed Assets Acquisition of PP&E Costs typically include: (1) Materials and direct labor (2) Overhead can be handled in two ways: 1. Assign no fixed overhead 2. Assign a portion of all overhead to the construction process need to be conservative as potential area of abuse . Companies use the second method extensively. LO 3 Describe the accounting problems associated with self-constructed assets. Chapter 10-7 GAAP requires capitalizing actual interest (with modification). Consistent with historical cost all costs incurred to bring the asset to the condition for its intended use....
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This note was uploaded on 11/10/2011 for the course ACCT 3367 taught by Professor Staff during the Fall '08 term at University of Houston.

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CH 10 - Chapter 10 Acquisition and Disposition of Property,...

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