TAILIEUCHUNG - Lecture Intermediate accounting (16th edition): Chapter 10 - Kieso, Weygandt, Warfield
Chapter 10 - Acquisition and disposition of property, plant, and equipment. After completing this chapter you should be able to: Describe property, plant, and equipment, identify the costs to include in initial valuation of property, plant, and equipment, describe the accounting problems associated with self-constructed assets, describe the accounting problems associated with interest capitalization. | PREVIEW OF CHAPTER 10 Intermediate Accounting 16th Edition Kieso ● Weygandt ● Warfield Understand property, plant, and equipment and its related costs. Describe the accounting problems associated with self-constructed assets. Describe the accounting problems associated with interest capitalization. LEARNING OBJECTIVES Understand accounting issues related to acquiring and valuing plant assets. Describe the accounting treatment for costs subsequent to acquisition. Describe the accounting treatment for the disposal of property, plant, and equipment. After studying this chapter, you should be able to: Acquisition and Disposition of Property, Plant, and Equipment 10 LO 1 “Used in operations” and not for resale. Long-term in nature and usually depreciated. Possess physical substance. Property, plant, and equipment are assets of a durable nature. Other terms commonly used are plant assets and fixed assets. PROPERTY, PLANT, AND EQUIPMENT Includes: Land, Building structures (offices, factories, warehouses), and Equipment (machinery, furniture, tools). LO 1 LO 1 Historical cost measures the cash or cash equivalent price of obtaining the asset and bringing it to the location and condition necessary for its intended use. Acquisition of Property, Plant, and Equipment Main reasons for historical cost valuation: Historical cost is reliable. Companies should not anticipate gains and losses but should recognize gains and losses only when the asset is sold. PROPERTY, PLANT, AND EQUIPMENT Includes all expenditures to acquire land and ready it for use. Costs typically include: Cost of Land purchase price; closing costs, such as title to the land, attorney’s fees, and recording fees; costs of grading, filling, draining, and clearing; assumption of any liens, mortgages, or encumbrances on the property; and additional land improvements that have an indefinite life. Acquisition of Property, Plant, and Equipment LO 1 Improvements with limited lives, such as private driveways, walks, .
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