上海交通大学：《中级财务会计》课程教学资源（PPT课件）ch10 Property,Plant,and Equipment：Acquisition and Disposition

Property,Plant,and Equipment: Acquisition and Disposition DONALD E.KIESO’JERRY J.WEYGANDT TERRY D.WARFIELD Chapter Intermediate Accounting 10 Intermediate Accounting 12th Edition Kieso,Weygandt,and Warfield wun Chapter 10-1 Prepared by Coby Harmon,University of California,Santa Barbara

Chapter 10-1 Property, Plant, and Equipment: Acquisition and Disposition Intermediate Accounting 12th Edition Kieso, Weygandt, and Warfield Prepared by Coby Harmon, University of California, Santa Barbara

Learning Objectives 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. Chapter 10-2

Chapter 10-2 Learning Objectives

Acguisition and Disposition of Property,Plant,and Equipment Cost Acquisition Valuation Subsequent to Dispositions Acquisition 0 Acquisition costs: 0 Cash discounts Additions ●Sale Land,buildings, 0 Deferred 0 Improvements 0 Involuntary equipment contracts and conversion Self-constructed 0 Lump-sum replacements 0 Miscellaneous assets purchases 0 Rearrangement problems Interest costs ●Stock issuance and reinstallation Observations ●Nonmonetary o Repairs exchanges o Summary Contributions Other valuation methods Chapter 10-3

Chapter 10-3 Acquisition and Disposition of Property, Plant, and Equipment

Property,Plant,and Equipment Property,plant,and equipment includes land,buildings, and equipment (machinery,furniture,tools). Major characteristics include: "Used in operations"and not for resale. Long-term in nature and usually depreciated Possess physical substance. Chapter 10-4 LO 1 Describe property,plant,and equipment

Chapter 10-4 “Used in operations” and not for resale. Long-term in nature and usually depreciated. Possess physical substance. Property, plant, and equipment includes land, buildings, and equipment (machinery, furniture, tools). Major characteristics include: Property, Plant, and Equipment

Acguisition and Valuation of PP&E Valued at Historical Cost,reasons include: ● At acquisition,cost reflects fair value. Historical cost is reliable. Companies should not anticipate gains and losses but should recognize gains and losses only when the asset is sold. APB Opinion No.6 states, “property,plant,and equipment should not be written up to reflect appraisal,market,or current values which are above cost." Chapter LO 2 Identify the costs to include in initial valuation 10-5 of property,plant,and equipment

Chapter 10-5 At acquisition, cost reflects fair value. Historical cost is reliable. Companies should not anticipate gains and losses but should recognize gains and losses only when the asset is sold. Valued at Historical Cost, reasons include: Acquisition and Valuation of PP&E APB Opinion No. 6 states, “property, plant, and equipment should not be written up to reflect appraisal, market, or current values which are above cost

Acguisition and Valuation of PP&E Cost of Land Includes all costs to acquire land and ready it for use. Costs typically include: (1)the purchase price; (2)closing costs,such as title to the land,attorney's fees,and recording fees; (3)costs of grading,filling,draining,and clearing: (4)assumption of any liens,mortgages,or encumbrances on the property;and (5)Additional land improvements that have an indefinite life. Chapter LO 2 Identify the costs to include in initial valuation 10-6 of property,plant,and equipment

Chapter 10-6 Includes all costs to acquire land and ready it for use. Costs typically include: Cost of Land Acquisition and Valuation of PP&E (1) the purchase price; (2) closing costs, such as title to the land, attorney ’s fees, and recording fees; (3) costs of grading, filling, draining, and clearing; (4) assumption of any liens, mortgages, or encumbrances on the property; and (5) Additional land improvements that have an indefinite life

Acguisition and Valuation of PP&E Cost of Buildings Includes all costs related directly to acquisition or construction. Costs typically include: (1)materials,labor,and overhead costs incurred during construction and (2)professional fees and building permits. Chapter LO 2 Identify the costs to include in initial valuation 10-7 of property,plant,and equipment

Chapter 10-7 Includes all costs related directly to acquisition or construction. Costs typically include: Cost of Buildings Acquisition and Valuation of PP&E (1) materials, labor, and overhead costs incurred during construction and (2) professional fees and building permits

Acguisition and Valuation of PP&E Cost of Equipment Include all costs incurred in acquiring the equipment and preparing it for use. Costs typically include: (1)purchase price, (2)freight and handling charges (3)insurance on the equipment while in transit, (4)cost of special foundations if required, (5)assembling and installation costs,and (6)costs of conducting trial runs. Chapter LO 2 Identify the costs to include in initial valuation 10-8 of property,plant,and equipment

Chapter 10-8 Include all costs incurred in acquiring the equipment and preparing it for use. Costs typically include: Cost of Equipment Acquisition and Valuation of PP&E (1) purchase price, (2) freight and handling charges (3) insurance on the equipment while in transit, (4) cost of special foundations if required, (5) assembling and installation costs, and (6) costs of conducting trial runs

Acquisition and Valuation of PP&E E10-1 (Acquisition Costs of Realty)The following expenditures and receipts are related to land,land improvements,and buildings acquired for use in a business enterprise.Determine how the following should be classified: Classification (a)Money borrowed to pay building contractor Notes Payable (b)Payment for construction from note proceeds Building (c)Cost of land fill and clearing Land (d)Delinguent real estate taxes on property Land assumed (e)Premium on insurance policy during Building construction (f)Refund of 1-month insurance premium because construction completed early (Building) Chapter LO 2 Identify the costs to include in initial valuation 10-9 of property,plant,and equipment

Chapter 10-9 E10-1 (Acquisition Costs of Realty) The following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. Determine how the following should be classified: Acquisition and Valuation of PP&E (a) Money borrowed to pay building contractor (b) Payment for construction from note proceeds (c) Cost of land fill and clearing (d) Delinquent real estate taxes on property assumed (e) Premium on insurance policy during construction (f) Refund of 1-month insurance premium because construction completed early

Acquisition and Valuation of PP&E E10-1 (Acquisition Costs of Realty)The following expenditures and receipts are related to land,land improvements,and buildings acquired for use in a business enterprise.Determine how the following should be classified: Costs of: (g)Architect's fee on building Building (h)Cost of real estate purchased as a plant site (land $200,000 and building $50,000) Land (① Commission fee paid to real estate agency Land () Installation of fences around property Land Improvements (k)Cost of razing and removing building Land (0 Proceeds from salvage of demolished building (Land) (m)Cost of parking lots and driveways Land Improvements (n) Cost of trees and shrubbery (permanent) Land Chapter LO 2 Identify the costs to include in initial valuation 10-10 of property,plant,and equipment

Chapter 10-10 E10-1 (Acquisition Costs of Realty) The following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. Determine how the following should be classified: Acquisition and Valuation of PP&E (g) Architect’s fee on building (h) Cost of real estate purchased as a plant site (land $200,000 and building $50,000) (i) Commission fee paid to real estate agency (j) Installation of fences around property (k) Cost of razing and removing building (l) Proceeds from salvage of demolished building (m) Cost of parking lots and driveways (n) Cost of trees and shrubbery (permanent)