ch 9 - Chapter 9 REPORTING AND ANALYZING LONGLIVED ASSETS 1...

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1 Chapter 9 REPORTING AND  REPORTING AND  ANALYZING LONG- ANALYZING LONG- LIVED ASSETS LIVED ASSETS
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2 Cost of Plant Assets Plant assets are resources that have  physical substance are  used in the operations  of a business are  not intended for sale  to customers deliver service potential  over their useful  lives (except land) Plant assets are recorded at cost cost consists of  all expenditures  necessary  to acquire the asset and  make it ready for its intended use 11 1
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3    Cost is measured by the  purchase price  or the  cash equivalent price  paid when non- cash assets are used in payment.     Plant Assets
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4 Cost of land  includes Cash price, closing costs, brokers’  commissions, accrued property taxes,  etc. Can also include costs to raze a  building, drain and fill the land Proceeds from sale of salvaged  materials are deducted from the cost Plant Assets Land
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5 Cost of   Land Improvements All expenditures necessary  to make  the improvements ready for their  intended use Drive ways Parking lots Fences Underground sprinklers
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6 Buildings All necessary expenditures  relating to the purchase or  construction of a building.  When a building is purchased  such costs include the purchase price closing costs (attorney's fees and  title insurance) real estate broker's commissions
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7 Buildings If a building is purchased, but  needs to be readied for its  intended use , cost includes expenditures for remodeling  rooms or offices replacing or repairing o roof o floors o electrical wiring o plumbing
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8 Buildings    When a building is constructed, its cost  consists of the contract price  architect's fees building permits excavation cost interest costs during                                  construction
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9 Equipment   Cost of equipment   includes purchase price sales tax freight charges and insurance  during transit paid by the  purchaser expenditures required in  assembling installing and testing the unit
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10 Leasing Versus Purchasing an  Asset   Advantages of leasing  include Reduced risk  of obsolescence Little or no  down payment Shared tax advantages Assets and liabilities  may not be recorded
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11 Review Question         Which of the following is/are properly  classified as plant assets (property, plant,  and equipment)?
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ch 9 - Chapter 9 REPORTING AND ANALYZING LONGLIVED ASSETS 1...

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