TAILIEUCHUNG - Lecture Intermediate accounting - Chapter 10: Property, plant, and equipment and intangible assets: acquisition and disposition
This chapter and the one that follows address the measurement and reporting issues involving property, plant, and equipment and intangible assets. These long-lived tangible and intangible assets are used in the production of goods and services. Chapter 10 covers the valuation at date of acquisition and the disposition of these assets. | Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition Chapter 10 Chapter 10: Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition This chapter and the one that follows address the measurement and reporting issues involving property, plant, and equipment and intangible assets. These long-lived tangible and intangible assets are used in the production of goods and services. Chapter 10 covers the valuation at date of acquisition and the disposition of these assets. Long-lived, Revenue-producing Assets Types of Assets Expected to Benefit Future Periods General Rule for Cost Capitalization The initial cost of an asset includes the purchase price and all expenditures necessary to bring the asset to its desired condition and location for use. Long-lived, revenue-producing assets are assets that are used in the business, and that are expected to benefit the operations into the future. There are two major categories of these assets: tangible and intangible. Tangible assets have physical substance. Included in this category are land, buildings, equipment, machinery, vehicles, and natural resources such as oil, gas, and mineral deposits. Intangible assets are assets without physical substance. Included in this category are patents, copyrights, trademarks, franchises, and goodwill. Long-lived, revenue-producing assets may be acquired in a number of ways. Regardless of the method of acquisition, the assets are recorded at their original cost. The recorded cost includes the purchase price and all expenditures necessary to bring the asset to its desired condition and location for use. Equipment Net purchase price Taxes Transportation costs Installation costs Testing and trial runs Costs to be Capitalized Land (not depreciable) Purchase price Real estate commissions Attorney’s fees Title search Title transfer fees Title insurance premiums Removing old buildings The costs to be capitalized for equipment include the net .
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